Correlation Between Capri Holdings and Hung Chou
Can any of the company-specific risk be diversified away by investing in both Capri Holdings and Hung Chou 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 Capri Holdings and Hung Chou into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Capri Holdings and Hung Chou Fiber, you can compare the effects of market volatilities on Capri Holdings and Hung Chou 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 Capri Holdings with a short position of Hung Chou. Check out your portfolio center. Please also check ongoing floating volatility patterns of Capri Holdings and Hung Chou.
Diversification Opportunities for Capri Holdings and Hung Chou
0.18 | Correlation Coefficient |
Average diversification
The 3 months correlation between Capri and Hung is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Capri Holdings and Hung Chou Fiber in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hung Chou Fiber and Capri Holdings 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 Capri Holdings are associated (or correlated) with Hung Chou. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hung Chou Fiber has no effect on the direction of Capri Holdings i.e., Capri Holdings and Hung Chou go up and down completely randomly.
Pair Corralation between Capri Holdings and Hung Chou
Given the investment horizon of 90 days Capri Holdings is expected to under-perform the Hung Chou. In addition to that, Capri Holdings is 2.94 times more volatile than Hung Chou Fiber. It trades about -0.02 of its total potential returns per unit of risk. Hung Chou Fiber is currently generating about 0.03 per unit of volatility. If you would invest 961.00 in Hung Chou Fiber on August 30, 2024 and sell it today you would earn a total of 124.00 from holding Hung Chou Fiber or generate 12.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 96.77% |
| Values | Daily Returns |
Capri Holdings vs. Hung Chou Fiber
Performance |
| Timeline |
| Capri Holdings |
| Hung Chou Fiber |
Capri Holdings and Hung Chou Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Capri Holdings and Hung Chou
The main advantage of trading using opposite Capri Holdings and Hung Chou positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Capri Holdings position performs unexpectedly, Hung Chou 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 Hung Chou will offset losses from the drop in Hung Chou's long position.| Capri Holdings vs. Movado Group | Capri Holdings vs. Signet Jewelers | Capri Holdings vs. Lanvin Group Holdings | Capri Holdings vs. TheRealReal |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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