Correlation Between Capri Holdings and Chun Yuan
Can any of the company-specific risk be diversified away by investing in both Capri Holdings and Chun Yuan 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 Chun Yuan into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Capri Holdings and Chun Yuan Steel, you can compare the effects of market volatilities on Capri Holdings and Chun Yuan 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 Chun Yuan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Capri Holdings and Chun Yuan.
Diversification Opportunities for Capri Holdings and Chun Yuan
-0.11 | Correlation Coefficient |
Good diversification
The 3 months correlation between Capri and Chun is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Capri Holdings and Chun Yuan Steel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chun Yuan Steel 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 Chun Yuan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chun Yuan Steel has no effect on the direction of Capri Holdings i.e., Capri Holdings and Chun Yuan go up and down completely randomly.
Pair Corralation between Capri Holdings and Chun Yuan
Given the investment horizon of 90 days Capri Holdings is expected to generate 2.96 times more return on investment than Chun Yuan. However, Capri Holdings is 2.96 times more volatile than Chun Yuan Steel. It trades about 0.26 of its potential returns per unit of risk. Chun Yuan Steel is currently generating about 0.06 per unit of risk. If you would invest 1,974 in Capri Holdings on September 1, 2024 and sell it today you would earn a total of 367.00 from holding Capri Holdings or generate 18.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Capri Holdings vs. Chun Yuan Steel
Performance |
| Timeline |
| Capri Holdings |
| Chun Yuan Steel |
Capri Holdings and Chun Yuan Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Capri Holdings and Chun Yuan
The main advantage of trading using opposite Capri Holdings and Chun Yuan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Capri Holdings position performs unexpectedly, Chun Yuan 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 Chun Yuan will offset losses from the drop in Chun Yuan's long position.| Capri Holdings vs. Movado Group | Capri Holdings vs. Signet Jewelers | Capri Holdings vs. Lanvin Group Holdings | Capri Holdings vs. TheRealReal |
| Chun Yuan vs. Basso Industry Corp | Chun Yuan vs. Chung Hsin Electric Machinery | Chun Yuan vs. TYC Brother Industrial | Chun Yuan vs. TECO Electric Machinery |
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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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