Correlation Between CHINA TONTINE and Aqua America
Can any of the company-specific risk be diversified away by investing in both CHINA TONTINE and Aqua America 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 CHINA TONTINE and Aqua America into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CHINA TONTINE WINES and Aqua America, you can compare the effects of market volatilities on CHINA TONTINE and Aqua America 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 CHINA TONTINE with a short position of Aqua America. Check out your portfolio center. Please also check ongoing floating volatility patterns of CHINA TONTINE and Aqua America.
Diversification Opportunities for CHINA TONTINE and Aqua America
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between CHINA and Aqua is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding CHINA TONTINE WINES and Aqua America in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aqua America and CHINA TONTINE 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 CHINA TONTINE WINES are associated (or correlated) with Aqua America. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aqua America has no effect on the direction of CHINA TONTINE i.e., CHINA TONTINE and Aqua America go up and down completely randomly.
Pair Corralation between CHINA TONTINE and Aqua America
Assuming the 90 days trading horizon CHINA TONTINE WINES is expected to generate 29.89 times more return on investment than Aqua America. However, CHINA TONTINE is 29.89 times more volatile than Aqua America. It trades about 0.04 of its potential returns per unit of risk. Aqua America is currently generating about -0.01 per unit of risk. If you would invest 0.70 in CHINA TONTINE WINES on September 14, 2024 and sell it today you would earn a total of 6.30 from holding CHINA TONTINE WINES or generate 900.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 99.8% |
| Values | Daily Returns |
CHINA TONTINE WINES vs. Aqua America
Performance |
| Timeline |
| CHINA TONTINE WINES |
| Aqua America |
CHINA TONTINE and Aqua America Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CHINA TONTINE and Aqua America
The main advantage of trading using opposite CHINA TONTINE and Aqua America positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CHINA TONTINE position performs unexpectedly, Aqua America 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 Aqua America will offset losses from the drop in Aqua America's long position.| CHINA TONTINE vs. Chiba Bank | CHINA TONTINE vs. PKSHA TECHNOLOGY INC | CHINA TONTINE vs. TFS FINANCIAL | CHINA TONTINE vs. SMA Solar Technology |
| Aqua America vs. bet at home AG | Aqua America vs. PLAYMATES TOYS | Aqua America vs. CHINA TONTINE WINES | Aqua America vs. KB HOME |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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