Correlation Between China Water and Easy Software
Can any of the company-specific risk be diversified away by investing in both China Water and Easy Software 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 Easy Software 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 Easy Software AG, you can compare the effects of market volatilities on China Water and Easy Software 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 Easy Software. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Water and Easy Software.
Diversification Opportunities for China Water and Easy Software
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between China and Easy is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding China Water Affairs and Easy Software AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Easy Software AG 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 Easy Software. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Easy Software AG has no effect on the direction of China Water i.e., China Water and Easy Software go up and down completely randomly.
Pair Corralation between China Water and Easy Software
Assuming the 90 days trading horizon China Water Affairs is expected to generate 1.55 times more return on investment than Easy Software. However, China Water is 1.55 times more volatile than Easy Software AG. It trades about 0.06 of its potential returns per unit of risk. Easy Software AG is currently generating about 0.03 per unit of risk. If you would invest 24.00 in China Water Affairs on October 9, 2024 and sell it today you would earn a total of 35.00 from holding China Water Affairs or generate 145.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
China Water Affairs vs. Easy Software AG
Performance |
| Timeline |
| China Water Affairs |
| Easy Software AG |
China Water and Easy Software Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Water and Easy Software
The main advantage of trading using opposite China Water and Easy Software positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Water position performs unexpectedly, Easy Software 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 Easy Software will offset losses from the drop in Easy Software's long position.| China Water vs. Fuji Media Holdings | China Water vs. PENN Entertainment | China Water vs. CarsalesCom | China Water vs. Flutter Entertainment PLC |
| Easy Software vs. Salesforce | Easy Software vs. Rocket Internet SE | Easy Software vs. Superior Plus Corp | Easy Software vs. NMI Holdings |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
Other Complementary Tools
| Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated | |
| Theme Ratings Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Money Flow Index Determine momentum by analyzing Money Flow Index and other technical indicators | |
| Portfolio Dashboard Portfolio dashboard that provides centralized access to all your investments | |
| AI Portfolio Architect Use AI to generate optimal portfolios and find profitable investment opportunities |