Correlation Between Chuangs China and ECHO INVESTMENT
Can any of the company-specific risk be diversified away by investing in both Chuangs China and ECHO INVESTMENT 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 Chuangs China and ECHO INVESTMENT into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Chuangs China Investments and ECHO INVESTMENT ZY, you can compare the effects of market volatilities on Chuangs China and ECHO INVESTMENT 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 Chuangs China with a short position of ECHO INVESTMENT. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chuangs China and ECHO INVESTMENT.
Diversification Opportunities for Chuangs China and ECHO INVESTMENT
0.02 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Chuangs and ECHO is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Chuangs China Investments and ECHO INVESTMENT ZY in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ECHO INVESTMENT ZY and Chuangs China 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 Chuangs China Investments are associated (or correlated) with ECHO INVESTMENT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ECHO INVESTMENT ZY has no effect on the direction of Chuangs China i.e., Chuangs China and ECHO INVESTMENT go up and down completely randomly.
Pair Corralation between Chuangs China and ECHO INVESTMENT
Assuming the 90 days horizon Chuangs China Investments is expected to under-perform the ECHO INVESTMENT. In addition to that, Chuangs China is 2.27 times more volatile than ECHO INVESTMENT ZY. It trades about -0.01 of its total potential returns per unit of risk. ECHO INVESTMENT ZY is currently generating about 0.07 per unit of volatility. If you would invest 51.00 in ECHO INVESTMENT ZY on September 1, 2024 and sell it today you would earn a total of 49.00 from holding ECHO INVESTMENT ZY or generate 96.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Chuangs China Investments vs. ECHO INVESTMENT ZY
Performance |
| Timeline |
| Chuangs China Investments |
| ECHO INVESTMENT ZY |
Chuangs China and ECHO INVESTMENT Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chuangs China and ECHO INVESTMENT
The main advantage of trading using opposite Chuangs China and ECHO INVESTMENT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chuangs China position performs unexpectedly, ECHO INVESTMENT 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 ECHO INVESTMENT will offset losses from the drop in ECHO INVESTMENT's long position.| Chuangs China vs. ADRIATIC METALS LS 013355 | Chuangs China vs. Astral Foods Limited | Chuangs China vs. LION ONE METALS | Chuangs China vs. United Natural Foods |
| ECHO INVESTMENT vs. OPEN HOUSE GROUP | ECHO INVESTMENT vs. Superior Plus Corp | ECHO INVESTMENT vs. NMI Holdings | ECHO INVESTMENT vs. Origin Agritech |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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