Correlation Between CHINA TONTINE and American Homes
Can any of the company-specific risk be diversified away by investing in both CHINA TONTINE and American Homes 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 American Homes 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 American Homes 4, you can compare the effects of market volatilities on CHINA TONTINE and American Homes 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 American Homes. Check out your portfolio center. Please also check ongoing floating volatility patterns of CHINA TONTINE and American Homes.
Diversification Opportunities for CHINA TONTINE and American Homes
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between CHINA and American is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding CHINA TONTINE WINES and American Homes 4 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Homes 4 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 American Homes. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Homes 4 has no effect on the direction of CHINA TONTINE i.e., CHINA TONTINE and American Homes go up and down completely randomly.
Pair Corralation between CHINA TONTINE and American Homes
Assuming the 90 days trading horizon CHINA TONTINE WINES is expected to generate 23.64 times more return on investment than American Homes. However, CHINA TONTINE is 23.64 times more volatile than American Homes 4. It trades about 0.04 of its potential returns per unit of risk. American Homes 4 is currently generating about 0.04 per unit of risk. If you would invest 0.70 in CHINA TONTINE WINES on September 22, 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 | 100.0% |
| Values | Daily Returns |
CHINA TONTINE WINES vs. American Homes 4
Performance |
| Timeline |
| CHINA TONTINE WINES |
| American Homes 4 |
CHINA TONTINE and American Homes Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CHINA TONTINE and American Homes
The main advantage of trading using opposite CHINA TONTINE and American Homes positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CHINA TONTINE position performs unexpectedly, American Homes 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 American Homes will offset losses from the drop in American Homes' long position.| CHINA TONTINE vs. Gaztransport Technigaz SA | CHINA TONTINE vs. CHEMICAL INDUSTRIES | CHINA TONTINE vs. TIANDE CHEMICAL | CHINA TONTINE vs. NISSAN CHEMICAL IND |
| American Homes vs. Air Lease | American Homes vs. Global Ship Lease | American Homes vs. Southwest Airlines Co | American Homes vs. CHINA TONTINE WINES |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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