Correlation Between Chuangs China and Vicinity Centres
Can any of the company-specific risk be diversified away by investing in both Chuangs China and Vicinity Centres 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 Vicinity Centres 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 Vicinity Centres, you can compare the effects of market volatilities on Chuangs China and Vicinity Centres 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 Vicinity Centres. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chuangs China and Vicinity Centres.
Diversification Opportunities for Chuangs China and Vicinity Centres
0.09 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Chuangs and Vicinity is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Chuangs China Investments and Vicinity Centres in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vicinity Centres 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 Vicinity Centres. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vicinity Centres has no effect on the direction of Chuangs China i.e., Chuangs China and Vicinity Centres go up and down completely randomly.
Pair Corralation between Chuangs China and Vicinity Centres
Assuming the 90 days horizon Chuangs China Investments is expected to under-perform the Vicinity Centres. In addition to that, Chuangs China is 3.66 times more volatile than Vicinity Centres. It trades about 0.0 of its total potential returns per unit of risk. Vicinity Centres is currently generating about 0.04 per unit of volatility. If you would invest 98.00 in Vicinity Centres on September 12, 2024 and sell it today you would earn a total of 20.00 from holding Vicinity Centres or generate 20.41% 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. Vicinity Centres
Performance |
| Timeline |
| Chuangs China Investments |
| Vicinity Centres |
Chuangs China and Vicinity Centres Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chuangs China and Vicinity Centres
The main advantage of trading using opposite Chuangs China and Vicinity Centres positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chuangs China position performs unexpectedly, Vicinity Centres 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 Vicinity Centres will offset losses from the drop in Vicinity Centres' long position.| Chuangs China vs. RCM TECHNOLOGIES | Chuangs China vs. Spirent Communications plc | Chuangs China vs. CITIC Telecom International | Chuangs China vs. Lion Biotechnologies |
| Vicinity Centres vs. Federal Agricultural Mortgage | Vicinity Centres vs. Tower One Wireless | Vicinity Centres vs. CSSC Offshore Marine | Vicinity Centres vs. Hanison Construction 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 Transaction History module to view history of all your transactions and understand their impact on performance.
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