Correlation Between Chuangs China and Sanyo Chemical
Can any of the company-specific risk be diversified away by investing in both Chuangs China and Sanyo Chemical 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 Sanyo Chemical 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 Sanyo Chemical Industries, you can compare the effects of market volatilities on Chuangs China and Sanyo Chemical 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 Sanyo Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chuangs China and Sanyo Chemical.
Diversification Opportunities for Chuangs China and Sanyo Chemical
0.15 | Correlation Coefficient |
Average diversification
The 3 months correlation between Chuangs and Sanyo is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Chuangs China Investments and Sanyo Chemical Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sanyo Chemical Industries 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 Sanyo Chemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sanyo Chemical Industries has no effect on the direction of Chuangs China i.e., Chuangs China and Sanyo Chemical go up and down completely randomly.
Pair Corralation between Chuangs China and Sanyo Chemical
If you would invest 1.00 in Chuangs China Investments on September 1, 2024 and sell it today you would earn a total of 0.00 from holding Chuangs China Investments or generate 0.0% 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. Sanyo Chemical Industries
Performance |
| Timeline |
| Chuangs China Investments |
| Sanyo Chemical Industries |
Chuangs China and Sanyo Chemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chuangs China and Sanyo Chemical
The main advantage of trading using opposite Chuangs China and Sanyo Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chuangs China position performs unexpectedly, Sanyo Chemical 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 Sanyo Chemical will offset losses from the drop in Sanyo Chemical's long position.| Chuangs China vs. ADRIATIC METALS LS 013355 | Chuangs China vs. Astral Foods Limited | Chuangs China vs. LION ONE METALS | Chuangs China vs. United Natural Foods |
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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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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