Correlation Between Chuangs China and Woolworths Group
Can any of the company-specific risk be diversified away by investing in both Chuangs China and Woolworths Group 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 Woolworths Group 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 Woolworths Group Limited, you can compare the effects of market volatilities on Chuangs China and Woolworths Group 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 Woolworths Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chuangs China and Woolworths Group.
Diversification Opportunities for Chuangs China and Woolworths Group
0.05 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Chuangs and Woolworths is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Chuangs China Investments and Woolworths Group Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Woolworths Group 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 Woolworths Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Woolworths Group has no effect on the direction of Chuangs China i.e., Chuangs China and Woolworths Group go up and down completely randomly.
Pair Corralation between Chuangs China and Woolworths Group
Assuming the 90 days horizon Chuangs China is expected to generate 2.56 times less return on investment than Woolworths Group. But when comparing it to its historical volatility, Chuangs China Investments is 2.17 times less risky than Woolworths Group. It trades about 0.0 of its potential returns per unit of risk. Woolworths Group Limited is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest 1,850 in Woolworths Group Limited on August 29, 2024 and sell it today you would lose (10.00) from holding Woolworths Group Limited or give up 0.54% 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. Woolworths Group Limited
Performance |
| Timeline |
| Chuangs China Investments |
| Woolworths Group |
Chuangs China and Woolworths Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chuangs China and Woolworths Group
The main advantage of trading using opposite Chuangs China and Woolworths Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chuangs China position performs unexpectedly, Woolworths Group 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 Woolworths Group will offset losses from the drop in Woolworths Group's long position.| Chuangs China vs. Playtech plc | Chuangs China vs. KOOL2PLAY SA ZY | Chuangs China vs. PLAYSTUDIOS A DL 0001 | Chuangs China vs. ANTA SPORTS PRODUCT |
| Woolworths Group vs. The Boston Beer | Woolworths Group vs. Air Lease | Woolworths Group vs. Global Ship Lease | Woolworths Group vs. Fevertree Drinks PLC |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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