Correlation Between Chuangs China and Suntory Beverage
Can any of the company-specific risk be diversified away by investing in both Chuangs China and Suntory Beverage 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 Suntory Beverage 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 Suntory Beverage Food, you can compare the effects of market volatilities on Chuangs China and Suntory Beverage 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 Suntory Beverage. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chuangs China and Suntory Beverage.
Diversification Opportunities for Chuangs China and Suntory Beverage
0.04 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Chuangs and Suntory is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Chuangs China Investments and Suntory Beverage Food in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Suntory Beverage Food 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 Suntory Beverage. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Suntory Beverage Food has no effect on the direction of Chuangs China i.e., Chuangs China and Suntory Beverage go up and down completely randomly.
Pair Corralation between Chuangs China and Suntory Beverage
Assuming the 90 days horizon Chuangs China is expected to generate 1.98 times less return on investment than Suntory Beverage. But when comparing it to its historical volatility, Chuangs China Investments is 1.12 times less risky than Suntory Beverage. It trades about 0.01 of its potential returns per unit of risk. Suntory Beverage Food is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 3,086 in Suntory Beverage Food on September 3, 2024 and sell it today you would earn a total of 48.00 from holding Suntory Beverage Food or generate 1.56% 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. Suntory Beverage Food
Performance |
| Timeline |
| Chuangs China Investments |
| Suntory Beverage Food |
Chuangs China and Suntory Beverage Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chuangs China and Suntory Beverage
The main advantage of trading using opposite Chuangs China and Suntory Beverage positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chuangs China position performs unexpectedly, Suntory Beverage 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 Suntory Beverage will offset losses from the drop in Suntory Beverage's long position.| Chuangs China vs. Treasury Wine Estates | Chuangs China vs. GigaMedia | Chuangs China vs. NAKED WINES PLC | Chuangs China vs. Tencent Music Entertainment |
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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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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