Correlation Between Canon Marketing and CHINA TELECOM
Can any of the company-specific risk be diversified away by investing in both Canon Marketing and CHINA TELECOM 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 Canon Marketing and CHINA TELECOM into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Canon Marketing Japan and CHINA TELECOM H , you can compare the effects of market volatilities on Canon Marketing and CHINA TELECOM 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 Canon Marketing with a short position of CHINA TELECOM. Check out your portfolio center. Please also check ongoing floating volatility patterns of Canon Marketing and CHINA TELECOM.
Diversification Opportunities for Canon Marketing and CHINA TELECOM
-0.42 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Canon and CHINA is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Canon Marketing Japan and CHINA TELECOM H in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CHINA TELECOM H and Canon Marketing 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 Canon Marketing Japan are associated (or correlated) with CHINA TELECOM. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CHINA TELECOM H has no effect on the direction of Canon Marketing i.e., Canon Marketing and CHINA TELECOM go up and down completely randomly.
Pair Corralation between Canon Marketing and CHINA TELECOM
Assuming the 90 days horizon Canon Marketing Japan is expected to generate 1.67 times more return on investment than CHINA TELECOM. However, Canon Marketing is 1.67 times more volatile than CHINA TELECOM H . It trades about 0.12 of its potential returns per unit of risk. CHINA TELECOM H is currently generating about -0.19 per unit of risk. If you would invest 2,840 in Canon Marketing Japan on September 13, 2024 and sell it today you would earn a total of 200.00 from holding Canon Marketing Japan or generate 7.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Canon Marketing Japan vs. CHINA TELECOM H
Performance |
| Timeline |
| Canon Marketing Japan |
| CHINA TELECOM H |
Canon Marketing and CHINA TELECOM Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Canon Marketing and CHINA TELECOM
The main advantage of trading using opposite Canon Marketing and CHINA TELECOM positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Canon Marketing position performs unexpectedly, CHINA TELECOM 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 CHINA TELECOM will offset losses from the drop in CHINA TELECOM's long position.| Canon Marketing vs. Canon Inc | Canon Marketing vs. Canon Inc | Canon Marketing vs. Ricoh Company | Canon Marketing vs. Brother Industries |
| CHINA TELECOM vs. Apple Inc | CHINA TELECOM vs. Apple Inc | CHINA TELECOM vs. Apple Inc | CHINA TELECOM vs. Apple Inc |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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