Correlation Between Diamond Estates and China Health
Can any of the company-specific risk be diversified away by investing in both Diamond Estates and China Health 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 Diamond Estates and China Health into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Diamond Estates Wines and China Health Industries, you can compare the effects of market volatilities on Diamond Estates and China Health 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 Diamond Estates with a short position of China Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Diamond Estates and China Health.
Diversification Opportunities for Diamond Estates and China Health
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Diamond and China is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Diamond Estates Wines and China Health Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Health Industries and Diamond Estates 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 Diamond Estates Wines are associated (or correlated) with China Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Health Industries has no effect on the direction of Diamond Estates i.e., Diamond Estates and China Health go up and down completely randomly.
Pair Corralation between Diamond Estates and China Health
Assuming the 90 days horizon Diamond Estates Wines is expected to under-perform the China Health. But the pink sheet apears to be less risky and, when comparing its historical volatility, Diamond Estates Wines is 10.13 times less risky than China Health. The pink sheet trades about -0.06 of its potential returns per unit of risk. The China Health Industries is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 11.00 in China Health Industries on October 13, 2024 and sell it today you would earn a total of 11.00 from holding China Health Industries or generate 100.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 99.4% |
| Values | Daily Returns |
Diamond Estates Wines vs. China Health Industries
Performance |
| Timeline |
| Diamond Estates Wines |
| China Health Industries |
Diamond Estates and China Health Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Diamond Estates and China Health
The main advantage of trading using opposite Diamond Estates and China Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Diamond Estates position performs unexpectedly, China Health 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 China Health will offset losses from the drop in China Health's long position.The idea behind Diamond Estates Wines and China Health Industries pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| China Health vs. The Mosaic | China Health vs. Albemarle | China Health vs. Ingredion Incorporated | China Health vs. Axalta Coating Systems |
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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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