Correlation Between COSTCO WHOLESALE and China BlueChemical
Can any of the company-specific risk be diversified away by investing in both COSTCO WHOLESALE and China BlueChemical 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 China BlueChemical 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 China BlueChemical, you can compare the effects of market volatilities on COSTCO WHOLESALE and China BlueChemical 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 China BlueChemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of COSTCO WHOLESALE and China BlueChemical.
Diversification Opportunities for COSTCO WHOLESALE and China BlueChemical
0.22 | Correlation Coefficient |
Modest diversification
The 3 months correlation between COSTCO and China is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding COSTCO WHOLESALE CDR and China BlueChemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China BlueChemical 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 China BlueChemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China BlueChemical has no effect on the direction of COSTCO WHOLESALE i.e., COSTCO WHOLESALE and China BlueChemical go up and down completely randomly.
Pair Corralation between COSTCO WHOLESALE and China BlueChemical
Assuming the 90 days trading horizon COSTCO WHOLESALE CDR is expected to generate 0.52 times more return on investment than China BlueChemical. However, COSTCO WHOLESALE CDR is 1.92 times less risky than China BlueChemical. It trades about 0.17 of its potential returns per unit of risk. China BlueChemical is currently generating about 0.04 per unit of risk. If you would invest 2,734 in COSTCO WHOLESALE CDR on September 13, 2024 and sell it today you would earn a total of 346.00 from holding COSTCO WHOLESALE CDR or generate 12.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
COSTCO WHOLESALE CDR vs. China BlueChemical
Performance |
| Timeline |
| COSTCO WHOLESALE CDR |
| China BlueChemical |
COSTCO WHOLESALE and China BlueChemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with COSTCO WHOLESALE and China BlueChemical
The main advantage of trading using opposite COSTCO WHOLESALE and China BlueChemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if COSTCO WHOLESALE position performs unexpectedly, China BlueChemical 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 China BlueChemical will offset losses from the drop in China BlueChemical's long position.| COSTCO WHOLESALE vs. American Homes 4 | COSTCO WHOLESALE vs. Tri Pointe Homes | COSTCO WHOLESALE vs. Perseus Mining Limited | COSTCO WHOLESALE vs. GALENA MINING LTD |
| China BlueChemical vs. Superior Plus Corp | China BlueChemical vs. SIVERS SEMICONDUCTORS AB | China BlueChemical vs. NorAm Drilling AS | China BlueChemical vs. Norsk Hydro ASA |
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 Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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