Correlation Between Chuangs China and Home Depot
Can any of the company-specific risk be diversified away by investing in both Chuangs China and Home Depot 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 Home Depot 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 The Home Depot, you can compare the effects of market volatilities on Chuangs China and Home Depot 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 Home Depot. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chuangs China and Home Depot.
Diversification Opportunities for Chuangs China and Home Depot
0.07 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Chuangs and Home is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Chuangs China Investments and The Home Depot in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Home Depot 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 Home Depot. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Home Depot has no effect on the direction of Chuangs China i.e., Chuangs China and Home Depot go up and down completely randomly.
Pair Corralation between Chuangs China and Home Depot
If you would invest 36,169 in The Home Depot on September 3, 2024 and sell it today you would earn a total of 4,566 from holding The Home Depot or generate 12.62% 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. The Home Depot
Performance |
| Timeline |
| Chuangs China Investments |
| Home Depot |
Chuangs China and Home Depot Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chuangs China and Home Depot
The main advantage of trading using opposite Chuangs China and Home Depot positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chuangs China position performs unexpectedly, Home Depot 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 Home Depot will offset losses from the drop in Home Depot'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 |
| Home Depot vs. Chuangs China Investments | Home Depot vs. ONWARD MEDICAL BV | Home Depot vs. SEI INVESTMENTS | Home Depot vs. Japan Medical Dynamic |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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