Correlation Between China Communications and Gentex
Can any of the company-specific risk be diversified away by investing in both China Communications and Gentex at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining China Communications and Gentex into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between China Communications Services and Gentex, you can compare the effects of market volatilities on China Communications and Gentex and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in China Communications with a short position of Gentex. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Communications and Gentex.
Diversification Opportunities for China Communications and Gentex
-0.52 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between China and Gentex is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding China Communications Services and Gentex in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gentex and China Communications is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on China Communications Services are associated (or correlated) with Gentex. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gentex has no effect on the direction of China Communications i.e., China Communications and Gentex go up and down completely randomly.
Pair Corralation between China Communications and Gentex
Assuming the 90 days horizon China Communications Services is expected to generate 4.81 times more return on investment than Gentex. However, China Communications is 4.81 times more volatile than Gentex. It trades about 0.07 of its potential returns per unit of risk. Gentex is currently generating about 0.02 per unit of risk. If you would invest 12.00 in China Communications Services on October 29, 2024 and sell it today you would earn a total of 40.00 from holding China Communications Services or generate 333.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
China Communications Services vs. Gentex
Performance |
| Timeline |
| China Communications |
| Gentex |
China Communications and Gentex Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Communications and Gentex
The main advantage of trading using opposite China Communications and Gentex positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Communications position performs unexpectedly, Gentex can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Gentex will offset losses from the drop in Gentex's long position.| China Communications vs. Ebro Foods SA | China Communications vs. Infrastrutture Wireless Italiane | China Communications vs. UNITED UTILITIES GR | China Communications vs. Canadian Utilities Limited |
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Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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