Correlation Between Chengdu PUTIAN and Sims Metal
Can any of the company-specific risk be diversified away by investing in both Chengdu PUTIAN and Sims Metal 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 Chengdu PUTIAN and Sims Metal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Chengdu PUTIAN Telecommunications and Sims Metal Management, you can compare the effects of market volatilities on Chengdu PUTIAN and Sims Metal 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 Chengdu PUTIAN with a short position of Sims Metal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chengdu PUTIAN and Sims Metal.
Diversification Opportunities for Chengdu PUTIAN and Sims Metal
0.18 | Correlation Coefficient |
Average diversification
The 3 months correlation between Chengdu and Sims is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Chengdu PUTIAN Telecommunicati and Sims Metal Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sims Metal Management and Chengdu PUTIAN 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 Chengdu PUTIAN Telecommunications are associated (or correlated) with Sims Metal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sims Metal Management has no effect on the direction of Chengdu PUTIAN i.e., Chengdu PUTIAN and Sims Metal go up and down completely randomly.
Pair Corralation between Chengdu PUTIAN and Sims Metal
Assuming the 90 days trading horizon Chengdu PUTIAN is expected to generate 3.68 times less return on investment than Sims Metal. In addition to that, Chengdu PUTIAN is 1.88 times more volatile than Sims Metal Management. It trades about 0.01 of its total potential returns per unit of risk. Sims Metal Management is currently generating about 0.04 per unit of volatility. If you would invest 765.00 in Sims Metal Management on November 2, 2024 and sell it today you would earn a total of 30.00 from holding Sims Metal Management or generate 3.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Chengdu PUTIAN Telecommunicati vs. Sims Metal Management
Performance |
| Timeline |
| Chengdu PUTIAN Telec |
| Sims Metal Management |
Chengdu PUTIAN and Sims Metal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chengdu PUTIAN and Sims Metal
The main advantage of trading using opposite Chengdu PUTIAN and Sims Metal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chengdu PUTIAN position performs unexpectedly, Sims Metal 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 Sims Metal will offset losses from the drop in Sims Metal's long position.| Chengdu PUTIAN vs. PICKN PAY STORES | Chengdu PUTIAN vs. Tyson Foods | Chengdu PUTIAN vs. PATTIES FOODS | Chengdu PUTIAN vs. BURLINGTON STORES |
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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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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