Correlation Between ALERION CLEANPOWER and China Communications
Can any of the company-specific risk be diversified away by investing in both ALERION CLEANPOWER and China Communications 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 ALERION CLEANPOWER and China Communications into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ALERION CLEANPOWER and China Communications Services, you can compare the effects of market volatilities on ALERION CLEANPOWER and China Communications 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 ALERION CLEANPOWER with a short position of China Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of ALERION CLEANPOWER and China Communications.
Diversification Opportunities for ALERION CLEANPOWER and China Communications
-0.05 | Correlation Coefficient |
Good diversification
The 3 months correlation between ALERION and China is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding ALERION CLEANPOWER and China Communications Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Communications and ALERION CLEANPOWER 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 ALERION CLEANPOWER are associated (or correlated) with China Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Communications has no effect on the direction of ALERION CLEANPOWER i.e., ALERION CLEANPOWER and China Communications go up and down completely randomly.
Pair Corralation between ALERION CLEANPOWER and China Communications
Assuming the 90 days trading horizon ALERION CLEANPOWER is expected to under-perform the China Communications. In addition to that, ALERION CLEANPOWER is 1.13 times more volatile than China Communications Services. It trades about -0.09 of its total potential returns per unit of risk. China Communications Services is currently generating about -0.07 per unit of volatility. If you would invest 53.00 in China Communications Services on October 21, 2024 and sell it today you would lose (1.00) from holding China Communications Services or give up 1.89% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
ALERION CLEANPOWER vs. China Communications Services
Performance |
| Timeline |
| ALERION CLEANPOWER |
| China Communications |
ALERION CLEANPOWER and China Communications Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ALERION CLEANPOWER and China Communications
The main advantage of trading using opposite ALERION CLEANPOWER and China Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ALERION CLEANPOWER position performs unexpectedly, China Communications 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 Communications will offset losses from the drop in China Communications' long position.| ALERION CLEANPOWER vs. Altair Engineering | ALERION CLEANPOWER vs. Wizz Air Holdings | ALERION CLEANPOWER vs. Alaska Air Group | ALERION CLEANPOWER vs. SOGECLAIR SA INH |
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 CEOs Directory module to screen CEOs from public companies around the world.
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