Correlation Between China Communications and USWE SPORTS
Can any of the company-specific risk be diversified away by investing in both China Communications and USWE SPORTS 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 China Communications and USWE SPORTS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between China Communications Construction and USWE SPORTS AB, you can compare the effects of market volatilities on China Communications and USWE SPORTS 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 China Communications with a short position of USWE SPORTS. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Communications and USWE SPORTS.
Diversification Opportunities for China Communications and USWE SPORTS
0.52 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between China and USWE is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding China Communications Construct and USWE SPORTS AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on USWE SPORTS AB and China Communications 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 China Communications Construction are associated (or correlated) with USWE SPORTS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of USWE SPORTS AB has no effect on the direction of China Communications i.e., China Communications and USWE SPORTS go up and down completely randomly.
Pair Corralation between China Communications and USWE SPORTS
Assuming the 90 days horizon China Communications Construction is expected to generate 2.71 times more return on investment than USWE SPORTS. However, China Communications is 2.71 times more volatile than USWE SPORTS AB. It trades about 0.08 of its potential returns per unit of risk. USWE SPORTS AB is currently generating about -0.07 per unit of risk. If you would invest 18.00 in China Communications Construction on September 4, 2024 and sell it today you would earn a total of 43.00 from holding China Communications Construction or generate 238.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
China Communications Construct vs. USWE SPORTS AB
Performance |
| Timeline |
| China Communications |
| USWE SPORTS AB |
China Communications and USWE SPORTS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Communications and USWE SPORTS
The main advantage of trading using opposite China Communications and USWE SPORTS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Communications position performs unexpectedly, USWE SPORTS 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 USWE SPORTS will offset losses from the drop in USWE SPORTS's long position.| China Communications vs. USWE SPORTS AB | China Communications vs. Columbia Sportswear | China Communications vs. MCEWEN MINING INC | China Communications vs. MINCO SILVER |
| USWE SPORTS vs. SCANSOURCE | USWE SPORTS vs. Uber Technologies | USWE SPORTS vs. GALENA MINING LTD | USWE SPORTS vs. Playtech 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 Global Correlations module to find global opportunities by holding instruments from different markets.
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