Correlation Between Chuangs China and Entravision Communications
Can any of the company-specific risk be diversified away by investing in both Chuangs China and Entravision Communications 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 Entravision Communications 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 Entravision Communications, you can compare the effects of market volatilities on Chuangs China and Entravision Communications 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 Entravision Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chuangs China and Entravision Communications.
Diversification Opportunities for Chuangs China and Entravision Communications
-0.08 | Correlation Coefficient |
Good diversification
The 3 months correlation between Chuangs and Entravision is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Chuangs China Investments and Entravision Communications in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Entravision Communications 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 Entravision Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Entravision Communications has no effect on the direction of Chuangs China i.e., Chuangs China and Entravision Communications go up and down completely randomly.
Pair Corralation between Chuangs China and Entravision Communications
Assuming the 90 days horizon Chuangs China Investments is expected to under-perform the Entravision Communications. In addition to that, Chuangs China is 1.39 times more volatile than Entravision Communications. It trades about -0.01 of its total potential returns per unit of risk. Entravision Communications is currently generating about -0.01 per unit of volatility. If you would invest 447.00 in Entravision Communications on September 4, 2024 and sell it today you would lose (223.00) from holding Entravision Communications or give up 49.89% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Chuangs China Investments vs. Entravision Communications
Performance |
| Timeline |
| Chuangs China Investments |
| Entravision Communications |
Chuangs China and Entravision Communications Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chuangs China and Entravision Communications
The main advantage of trading using opposite Chuangs China and Entravision Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chuangs China position performs unexpectedly, Entravision Communications 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 Entravision Communications will offset losses from the drop in Entravision Communications' long position.| Chuangs China vs. Hongkong Land Holdings | Chuangs China vs. Superior Plus Corp | Chuangs China vs. NMI Holdings | Chuangs China vs. Origin Agritech |
| Entravision Communications vs. News Corporation | Entravision Communications vs. News Corporation | Entravision Communications vs. Superior Plus Corp | Entravision Communications 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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