Correlation Between China Communications and Levi Strauss
Can any of the company-specific risk be diversified away by investing in both China Communications and Levi Strauss 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 Levi Strauss 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 Levi Strauss Co, you can compare the effects of market volatilities on China Communications and Levi Strauss 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 Levi Strauss. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Communications and Levi Strauss.
Diversification Opportunities for China Communications and Levi Strauss
-0.33 | Correlation Coefficient |
Very good diversification
The 3 months correlation between China and Levi is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding China Communications Services and Levi Strauss Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Levi Strauss 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 Levi Strauss. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Levi Strauss has no effect on the direction of China Communications i.e., China Communications and Levi Strauss go up and down completely randomly.
Pair Corralation between China Communications and Levi Strauss
Assuming the 90 days horizon China Communications Services is expected to generate 2.55 times more return on investment than Levi Strauss. However, China Communications is 2.55 times more volatile than Levi Strauss Co. It trades about 0.08 of its potential returns per unit of risk. Levi Strauss Co is currently generating about 0.05 per unit of risk. If you would invest 19.00 in China Communications Services on September 5, 2024 and sell it today you would earn a total of 30.00 from holding China Communications Services or generate 157.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.6% |
| Values | Daily Returns |
China Communications Services vs. Levi Strauss Co
Performance |
| Timeline |
| China Communications |
| Levi Strauss |
China Communications and Levi Strauss Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Communications and Levi Strauss
The main advantage of trading using opposite China Communications and Levi Strauss positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Communications position performs unexpectedly, Levi Strauss 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 Levi Strauss will offset losses from the drop in Levi Strauss' long position.| China Communications vs. Nufarm Limited | China Communications vs. Granite Construction | China Communications vs. X FAB Silicon Foundries | China Communications vs. Hitachi Construction Machinery |
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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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