Correlation Between Chongqing Rural and Ross Stores
Can any of the company-specific risk be diversified away by investing in both Chongqing Rural and Ross Stores 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 Chongqing Rural and Ross Stores into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Chongqing Rural Commercial and Ross Stores, you can compare the effects of market volatilities on Chongqing Rural and Ross Stores 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 Chongqing Rural with a short position of Ross Stores. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chongqing Rural and Ross Stores.
Diversification Opportunities for Chongqing Rural and Ross Stores
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Chongqing and Ross is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Chongqing Rural Commercial and Ross Stores in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ross Stores and Chongqing Rural 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 Chongqing Rural Commercial are associated (or correlated) with Ross Stores. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ross Stores has no effect on the direction of Chongqing Rural i.e., Chongqing Rural and Ross Stores go up and down completely randomly.
Pair Corralation between Chongqing Rural and Ross Stores
Assuming the 90 days horizon Chongqing Rural Commercial is expected to generate 4.27 times more return on investment than Ross Stores. However, Chongqing Rural is 4.27 times more volatile than Ross Stores. It trades about 0.02 of its potential returns per unit of risk. Ross Stores is currently generating about -0.08 per unit of risk. If you would invest 2,590 in Chongqing Rural Commercial on October 1, 2024 and sell it today you would earn a total of 2.00 from holding Chongqing Rural Commercial or generate 0.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.24% |
| Values | Daily Returns |
Chongqing Rural Commercial vs. Ross Stores
Performance |
| Timeline |
| Chongqing Rural Comm |
| Ross Stores |
Chongqing Rural and Ross Stores Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chongqing Rural and Ross Stores
The main advantage of trading using opposite Chongqing Rural and Ross Stores positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chongqing Rural position performs unexpectedly, Ross Stores 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 Ross Stores will offset losses from the drop in Ross Stores' long position.| Chongqing Rural vs. Everus Construction Group | Chongqing Rural vs. Jeld Wen Holding | Chongqing Rural vs. Integrated Drilling Equipment | Chongqing Rural vs. Tyson Foods |
| Ross Stores vs. Macys Inc | Ross Stores vs. Wayfair | Ross Stores vs. 1StdibsCom | Ross Stores vs. AutoNation |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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