Correlation Between CHINA TONTINE and British American
Can any of the company-specific risk be diversified away by investing in both CHINA TONTINE and British American 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 British American 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 British American Tobacco, you can compare the effects of market volatilities on CHINA TONTINE and British American 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 British American. Check out your portfolio center. Please also check ongoing floating volatility patterns of CHINA TONTINE and British American.
Diversification Opportunities for CHINA TONTINE and British American
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between CHINA and British is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding CHINA TONTINE WINES and British American Tobacco in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on British American Tobacco 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 British American. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of British American Tobacco has no effect on the direction of CHINA TONTINE i.e., CHINA TONTINE and British American go up and down completely randomly.
Pair Corralation between CHINA TONTINE and British American
Assuming the 90 days trading horizon CHINA TONTINE WINES is expected to generate 43.98 times more return on investment than British American. However, CHINA TONTINE is 43.98 times more volatile than British American Tobacco. It trades about 0.05 of its potential returns per unit of risk. British American Tobacco is currently generating about 0.07 per unit of risk. If you would invest 0.70 in CHINA TONTINE WINES on August 26, 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 | 99.7% |
| Values | Daily Returns |
CHINA TONTINE WINES vs. British American Tobacco
Performance |
| Timeline |
| CHINA TONTINE WINES |
| British American Tobacco |
CHINA TONTINE and British American Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CHINA TONTINE and British American
The main advantage of trading using opposite CHINA TONTINE and British American positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CHINA TONTINE position performs unexpectedly, British American 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 British American will offset losses from the drop in British American's long position.| CHINA TONTINE vs. Diageo plc | CHINA TONTINE vs. Superior Plus Corp | CHINA TONTINE vs. NMI Holdings | CHINA TONTINE vs. Origin Agritech |
| British American vs. SIMS METAL MGT | British American vs. PARKEN Sport Entertainment | British American vs. Norwegian Air Shuttle | British American 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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