Correlation Between COSTCO WHOLESALE and CN DATANG
Can any of the company-specific risk be diversified away by investing in both COSTCO WHOLESALE and CN DATANG 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 COSTCO WHOLESALE and CN DATANG into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between COSTCO WHOLESALE CDR and CN DATANG C, you can compare the effects of market volatilities on COSTCO WHOLESALE and CN DATANG 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 COSTCO WHOLESALE with a short position of CN DATANG. Check out your portfolio center. Please also check ongoing floating volatility patterns of COSTCO WHOLESALE and CN DATANG.
Diversification Opportunities for COSTCO WHOLESALE and CN DATANG
-0.1 | Correlation Coefficient |
Good diversification
The 3 months correlation between COSTCO and DT7 is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding COSTCO WHOLESALE CDR and CN DATANG C in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CN DATANG C and COSTCO WHOLESALE 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 COSTCO WHOLESALE CDR are associated (or correlated) with CN DATANG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CN DATANG C has no effect on the direction of COSTCO WHOLESALE i.e., COSTCO WHOLESALE and CN DATANG go up and down completely randomly.
Pair Corralation between COSTCO WHOLESALE and CN DATANG
Assuming the 90 days trading horizon COSTCO WHOLESALE CDR is expected to generate 0.67 times more return on investment than CN DATANG. However, COSTCO WHOLESALE CDR is 1.49 times less risky than CN DATANG. It trades about 0.14 of its potential returns per unit of risk. CN DATANG C is currently generating about 0.08 per unit of risk. If you would invest 2,800 in COSTCO WHOLESALE CDR on November 4, 2024 and sell it today you would earn a total of 140.00 from holding COSTCO WHOLESALE CDR or generate 5.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
COSTCO WHOLESALE CDR vs. CN DATANG C
Performance |
| Timeline |
| COSTCO WHOLESALE CDR |
| CN DATANG C |
COSTCO WHOLESALE and CN DATANG Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with COSTCO WHOLESALE and CN DATANG
The main advantage of trading using opposite COSTCO WHOLESALE and CN DATANG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if COSTCO WHOLESALE position performs unexpectedly, CN DATANG 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 CN DATANG will offset losses from the drop in CN DATANG's long position.| COSTCO WHOLESALE vs. VULCAN MATERIALS | COSTCO WHOLESALE vs. Sumitomo Rubber Industries | COSTCO WHOLESALE vs. GOODYEAR T RUBBER | COSTCO WHOLESALE vs. CARDINAL HEALTH |
| CN DATANG vs. Salesforce | CN DATANG vs. Choice Hotels International | CN DATANG vs. MUTUIONLINE | CN DATANG vs. CODERE ONLINE LUX |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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