Correlation Between China New and Illumina
Can any of the company-specific risk be diversified away by investing in both China New and Illumina 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 New and Illumina into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between China New Energy and Illumina, you can compare the effects of market volatilities on China New and Illumina 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 New with a short position of Illumina. Check out your portfolio center. Please also check ongoing floating volatility patterns of China New and Illumina.
Diversification Opportunities for China New and Illumina
Very good diversification
The 3 months correlation between China and Illumina is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding China New Energy and Illumina in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Illumina and China New 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 New Energy are associated (or correlated) with Illumina. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Illumina has no effect on the direction of China New i.e., China New and Illumina go up and down completely randomly.
Pair Corralation between China New and Illumina
Given the investment horizon of 90 days China New Energy is expected to generate 15.78 times more return on investment than Illumina. However, China New is 15.78 times more volatile than Illumina. It trades about 0.19 of its potential returns per unit of risk. Illumina is currently generating about 0.01 per unit of risk. If you would invest 0.40 in China New Energy on September 1, 2024 and sell it today you would earn a total of 0.40 from holding China New Energy or generate 100.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
China New Energy vs. Illumina
Performance |
| Timeline |
| China New Energy |
| Illumina |
China New and Illumina Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China New and Illumina
The main advantage of trading using opposite China New and Illumina positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China New position performs unexpectedly, Illumina 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 Illumina will offset losses from the drop in Illumina's long position.| China New vs. Sonic Healthcare Ltd | China New vs. Lonza Group | China New vs. Charles River Laboratories | China New vs. Qiagen NV |
| Illumina vs. Thermo Fisher Scientific | Illumina vs. Danaher | Illumina vs. Waters | Illumina vs. IDEXX Laboratories |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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