Correlation Between Capri Holdings and Chi Hua
Can any of the company-specific risk be diversified away by investing in both Capri Holdings and Chi Hua 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 Chi Hua into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Capri Holdings and Chi Hua Fitness, you can compare the effects of market volatilities on Capri Holdings and Chi Hua 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 Chi Hua. Check out your portfolio center. Please also check ongoing floating volatility patterns of Capri Holdings and Chi Hua.
Diversification Opportunities for Capri Holdings and Chi Hua
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Capri and Chi is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Capri Holdings and Chi Hua Fitness in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chi Hua Fitness 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 Chi Hua. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chi Hua Fitness has no effect on the direction of Capri Holdings i.e., Capri Holdings and Chi Hua go up and down completely randomly.
Pair Corralation between Capri Holdings and Chi Hua
Given the investment horizon of 90 days Capri Holdings is expected to under-perform the Chi Hua. In addition to that, Capri Holdings is 3.32 times more volatile than Chi Hua Fitness. It trades about -0.03 of its total potential returns per unit of risk. Chi Hua Fitness is currently generating about -0.06 per unit of volatility. If you would invest 4,239 in Chi Hua Fitness on August 29, 2024 and sell it today you would lose (514.00) from holding Chi Hua Fitness or give up 12.13% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Capri Holdings vs. Chi Hua Fitness
Performance |
| Timeline |
| Capri Holdings |
| Chi Hua Fitness |
Capri Holdings and Chi Hua Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Capri Holdings and Chi Hua
The main advantage of trading using opposite Capri Holdings and Chi Hua positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Capri Holdings position performs unexpectedly, Chi Hua 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 Chi Hua will offset losses from the drop in Chi Hua's long position.| Capri Holdings vs. Movado Group | Capri Holdings vs. Signet Jewelers | Capri Holdings vs. Lanvin Group Holdings | Capri Holdings vs. TheRealReal |
| Chi Hua vs. Feng Tay Enterprises | Chi Hua vs. Ruentex Materials Co | Chi Hua vs. Symtek Automation Asia | Chi Hua vs. CTCI Corp |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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