Correlation Between Chuangs China and COMPASS GROUP
Can any of the company-specific risk be diversified away by investing in both Chuangs China and COMPASS 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 COMPASS 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 COMPASS GROUP, you can compare the effects of market volatilities on Chuangs China and COMPASS 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 COMPASS GROUP. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chuangs China and COMPASS GROUP.
Diversification Opportunities for Chuangs China and COMPASS GROUP
-0.09 | Correlation Coefficient |
Good diversification
The 3 months correlation between Chuangs and COMPASS is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Chuangs China Investments and COMPASS GROUP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on COMPASS 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 COMPASS GROUP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of COMPASS GROUP has no effect on the direction of Chuangs China i.e., Chuangs China and COMPASS GROUP go up and down completely randomly.
Pair Corralation between Chuangs China and COMPASS GROUP
If you would invest 2,800 in COMPASS GROUP on August 31, 2024 and sell it today you would earn a total of 320.00 from holding COMPASS GROUP or generate 11.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Chuangs China Investments vs. COMPASS GROUP
Performance |
| Timeline |
| Chuangs China Investments |
| COMPASS GROUP |
Chuangs China and COMPASS GROUP Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chuangs China and COMPASS GROUP
The main advantage of trading using opposite Chuangs China and COMPASS GROUP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chuangs China position performs unexpectedly, COMPASS 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 COMPASS GROUP will offset losses from the drop in COMPASS GROUP's long position.| Chuangs China vs. Sun Hung Kai | Chuangs China vs. China Overseas Land | Chuangs China vs. CHINA VANKE TD | Chuangs China vs. Longfor Group 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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