Correlation Between COLUMBIA SPORTSWEAR and Qingdao Haier
Can any of the company-specific risk be diversified away by investing in both COLUMBIA SPORTSWEAR and Qingdao Haier 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 COLUMBIA SPORTSWEAR and Qingdao Haier into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between COLUMBIA SPORTSWEAR and Qingdao Haier Co, you can compare the effects of market volatilities on COLUMBIA SPORTSWEAR and Qingdao Haier 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 COLUMBIA SPORTSWEAR with a short position of Qingdao Haier. Check out your portfolio center. Please also check ongoing floating volatility patterns of COLUMBIA SPORTSWEAR and Qingdao Haier.
Diversification Opportunities for COLUMBIA SPORTSWEAR and Qingdao Haier
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between COLUMBIA and Qingdao is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding COLUMBIA SPORTSWEAR and Qingdao Haier Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Qingdao Haier and COLUMBIA SPORTSWEAR 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 COLUMBIA SPORTSWEAR are associated (or correlated) with Qingdao Haier. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Qingdao Haier has no effect on the direction of COLUMBIA SPORTSWEAR i.e., COLUMBIA SPORTSWEAR and Qingdao Haier go up and down completely randomly.
Pair Corralation between COLUMBIA SPORTSWEAR and Qingdao Haier
Assuming the 90 days trading horizon COLUMBIA SPORTSWEAR is expected to generate 0.76 times more return on investment than Qingdao Haier. However, COLUMBIA SPORTSWEAR is 1.31 times less risky than Qingdao Haier. It trades about 0.13 of its potential returns per unit of risk. Qingdao Haier Co is currently generating about 0.1 per unit of risk. If you would invest 7,272 in COLUMBIA SPORTSWEAR on September 3, 2024 and sell it today you would earn a total of 1,028 from holding COLUMBIA SPORTSWEAR or generate 14.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
COLUMBIA SPORTSWEAR vs. Qingdao Haier Co
Performance |
| Timeline |
| COLUMBIA SPORTSWEAR |
| Qingdao Haier |
COLUMBIA SPORTSWEAR and Qingdao Haier Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with COLUMBIA SPORTSWEAR and Qingdao Haier
The main advantage of trading using opposite COLUMBIA SPORTSWEAR and Qingdao Haier positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if COLUMBIA SPORTSWEAR position performs unexpectedly, Qingdao Haier 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 Qingdao Haier will offset losses from the drop in Qingdao Haier's long position.| COLUMBIA SPORTSWEAR vs. TOTAL GABON | COLUMBIA SPORTSWEAR vs. Walgreens Boots Alliance | COLUMBIA SPORTSWEAR vs. Banco Santander SA | COLUMBIA SPORTSWEAR vs. Peak Resources Limited |
| Qingdao Haier vs. PLAYTIKA HOLDING DL 01 | Qingdao Haier vs. Playtech plc | Qingdao Haier vs. USWE SPORTS AB | Qingdao Haier vs. COLUMBIA SPORTSWEAR |
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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