Correlation Between China Water and Grupo Carso
Can any of the company-specific risk be diversified away by investing in both China Water and Grupo Carso 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 Water and Grupo Carso into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between China Water Affairs and Grupo Carso SAB, you can compare the effects of market volatilities on China Water and Grupo Carso 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 Water with a short position of Grupo Carso. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Water and Grupo Carso.
Diversification Opportunities for China Water and Grupo Carso
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between China and Grupo is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding China Water Affairs and Grupo Carso SAB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grupo Carso SAB and China Water 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 Water Affairs are associated (or correlated) with Grupo Carso. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grupo Carso SAB has no effect on the direction of China Water i.e., China Water and Grupo Carso go up and down completely randomly.
Pair Corralation between China Water and Grupo Carso
Assuming the 90 days trading horizon China Water Affairs is expected to generate 2.04 times more return on investment than Grupo Carso. However, China Water is 2.04 times more volatile than Grupo Carso SAB. It trades about 0.08 of its potential returns per unit of risk. Grupo Carso SAB is currently generating about 0.02 per unit of risk. If you would invest 40.00 in China Water Affairs on September 5, 2024 and sell it today you would earn a total of 13.00 from holding China Water Affairs or generate 32.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 98.85% |
| Values | Daily Returns |
China Water Affairs vs. Grupo Carso SAB
Performance |
| Timeline |
| China Water Affairs |
| Grupo Carso SAB |
China Water and Grupo Carso Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Water and Grupo Carso
The main advantage of trading using opposite China Water and Grupo Carso positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Water position performs unexpectedly, Grupo Carso 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 Grupo Carso will offset losses from the drop in Grupo Carso's long position.| China Water vs. Grupo Carso SAB | China Water vs. AM EAGLE OUTFITTERS | China Water vs. G III Apparel Group | China Water vs. Mitsui Chemicals |
| Grupo Carso vs. Chunghwa Telecom Co | Grupo Carso vs. Singapore Telecommunications Limited | Grupo Carso vs. MCEWEN MINING INC | Grupo Carso vs. Perseus Mining Limited |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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