Correlation Between China Communications and STORE ELECTRONIC
Can any of the company-specific risk be diversified away by investing in both China Communications and STORE ELECTRONIC 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 STORE ELECTRONIC 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 STORE ELECTRONIC, you can compare the effects of market volatilities on China Communications and STORE ELECTRONIC 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 STORE ELECTRONIC. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Communications and STORE ELECTRONIC.
Diversification Opportunities for China Communications and STORE ELECTRONIC
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between China and STORE is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding China Communications Services and STORE ELECTRONIC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on STORE ELECTRONIC 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 STORE ELECTRONIC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of STORE ELECTRONIC has no effect on the direction of China Communications i.e., China Communications and STORE ELECTRONIC go up and down completely randomly.
Pair Corralation between China Communications and STORE ELECTRONIC
Assuming the 90 days horizon China Communications Services is expected to generate 2.45 times more return on investment than STORE ELECTRONIC. However, China Communications is 2.45 times more volatile than STORE ELECTRONIC. It trades about 0.09 of its potential returns per unit of risk. STORE ELECTRONIC is currently generating about 0.04 per unit of risk. If you would invest 21.00 in China Communications Services on November 7, 2024 and sell it today you would earn a total of 32.00 from holding China Communications Services or generate 152.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
China Communications Services vs. STORE ELECTRONIC
Performance |
| Timeline |
| China Communications |
| STORE ELECTRONIC |
China Communications and STORE ELECTRONIC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Communications and STORE ELECTRONIC
The main advantage of trading using opposite China Communications and STORE ELECTRONIC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Communications position performs unexpectedly, STORE ELECTRONIC 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 STORE ELECTRONIC will offset losses from the drop in STORE ELECTRONIC's long position.| China Communications vs. REMEDY ENTERTAINMENT OYJ | China Communications vs. Nexstar Media Group | China Communications vs. The Home Depot | China Communications vs. American Homes 4 |
| STORE ELECTRONIC vs. MAVEN WIRELESS SWEDEN | STORE ELECTRONIC vs. SEI INVESTMENTS | STORE ELECTRONIC vs. Air Lease | STORE ELECTRONIC vs. CDL INVESTMENT |
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 Stocks Directory module to find actively traded stocks across global markets.
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