Correlation Between Chuangs China and Jacquet Metal
Can any of the company-specific risk be diversified away by investing in both Chuangs China and Jacquet Metal 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 Jacquet Metal 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 Jacquet Metal Service, you can compare the effects of market volatilities on Chuangs China and Jacquet Metal 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 Jacquet Metal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chuangs China and Jacquet Metal.
Diversification Opportunities for Chuangs China and Jacquet Metal
0.06 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Chuangs and Jacquet is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Chuangs China Investments and Jacquet Metal Service in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jacquet Metal Service 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 Jacquet Metal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jacquet Metal Service has no effect on the direction of Chuangs China i.e., Chuangs China and Jacquet Metal go up and down completely randomly.
Pair Corralation between Chuangs China and Jacquet Metal
Assuming the 90 days horizon Chuangs China Investments is expected to generate 3.59 times more return on investment than Jacquet Metal. However, Chuangs China is 3.59 times more volatile than Jacquet Metal Service. It trades about 0.01 of its potential returns per unit of risk. Jacquet Metal Service is currently generating about 0.02 per unit of risk. If you would invest 1.30 in Chuangs China Investments on August 25, 2024 and sell it today you would lose (0.30) from holding Chuangs China Investments or give up 23.08% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Chuangs China Investments vs. Jacquet Metal Service
Performance |
| Timeline |
| Chuangs China Investments |
| Jacquet Metal Service |
Chuangs China and Jacquet Metal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chuangs China and Jacquet Metal
The main advantage of trading using opposite Chuangs China and Jacquet Metal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chuangs China position performs unexpectedly, Jacquet Metal 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 Jacquet Metal will offset losses from the drop in Jacquet Metal's long position.| Chuangs China vs. SHIN ETSU CHEMICAL | Chuangs China vs. URBAN OUTFITTERS | Chuangs China vs. Quaker Chemical | Chuangs China vs. DEVRY EDUCATION GRP |
| Jacquet Metal vs. ArcelorMittal SA | Jacquet Metal vs. ArcelorMittal | Jacquet Metal vs. Nippon Steel | Jacquet Metal vs. NIPPON STEEL SPADR |
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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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