Correlation Between China Xuefeng and Mercedes Benz
Can any of the company-specific risk be diversified away by investing in both China Xuefeng and Mercedes Benz 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 Xuefeng and Mercedes Benz into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between China Xuefeng Environmental and Mercedes Benz Group AG, you can compare the effects of market volatilities on China Xuefeng and Mercedes Benz 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 Xuefeng with a short position of Mercedes Benz. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Xuefeng and Mercedes Benz.
Diversification Opportunities for China Xuefeng and Mercedes Benz
0.03 | Correlation Coefficient |
Significant diversification
The 3 months correlation between China and Mercedes is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding China Xuefeng Environmental and Mercedes Benz Group AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mercedes Benz Group and China Xuefeng 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 Xuefeng Environmental are associated (or correlated) with Mercedes Benz. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mercedes Benz Group has no effect on the direction of China Xuefeng i.e., China Xuefeng and Mercedes Benz go up and down completely randomly.
Pair Corralation between China Xuefeng and Mercedes Benz
Given the investment horizon of 90 days China Xuefeng Environmental is expected to generate 17.15 times more return on investment than Mercedes Benz. However, China Xuefeng is 17.15 times more volatile than Mercedes Benz Group AG. It trades about 0.09 of its potential returns per unit of risk. Mercedes Benz Group AG is currently generating about -0.01 per unit of risk. If you would invest 9.00 in China Xuefeng Environmental on November 2, 2024 and sell it today you would lose (7.20) from holding China Xuefeng Environmental or give up 80.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
China Xuefeng Environmental vs. Mercedes Benz Group AG
Performance |
| Timeline |
| China Xuefeng Enviro |
| Mercedes Benz Group |
China Xuefeng and Mercedes Benz Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Xuefeng and Mercedes Benz
The main advantage of trading using opposite China Xuefeng and Mercedes Benz positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Xuefeng position performs unexpectedly, Mercedes Benz 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 Mercedes Benz will offset losses from the drop in Mercedes Benz's long position.| China Xuefeng vs. Vaporbrands Intl | China Xuefeng vs. Faraday Future Intelligent | China Xuefeng vs. Aston Martin Lagonda | China Xuefeng vs. Polestar Automotive Holding |
| Mercedes Benz vs. Porsche Automobile Holding | Mercedes Benz vs. Volkswagen AG 110 | Mercedes Benz vs. Mercedes Benz Group AG | Mercedes Benz vs. Volkswagen AG Pref |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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