Correlation Between COMMERCIAL VEHICLE and China BlueChemical
Can any of the company-specific risk be diversified away by investing in both COMMERCIAL VEHICLE and China BlueChemical 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 COMMERCIAL VEHICLE and China BlueChemical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between COMMERCIAL VEHICLE and China BlueChemical, you can compare the effects of market volatilities on COMMERCIAL VEHICLE and China BlueChemical 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 COMMERCIAL VEHICLE with a short position of China BlueChemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of COMMERCIAL VEHICLE and China BlueChemical.
Diversification Opportunities for COMMERCIAL VEHICLE and China BlueChemical
-0.5 | Correlation Coefficient |
Very good diversification
The 3 months correlation between COMMERCIAL and China is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding COMMERCIAL VEHICLE and China BlueChemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China BlueChemical and COMMERCIAL VEHICLE 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 COMMERCIAL VEHICLE are associated (or correlated) with China BlueChemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China BlueChemical has no effect on the direction of COMMERCIAL VEHICLE i.e., COMMERCIAL VEHICLE and China BlueChemical go up and down completely randomly.
Pair Corralation between COMMERCIAL VEHICLE and China BlueChemical
Assuming the 90 days trading horizon COMMERCIAL VEHICLE is expected to under-perform the China BlueChemical. In addition to that, COMMERCIAL VEHICLE is 1.91 times more volatile than China BlueChemical. It trades about -0.08 of its total potential returns per unit of risk. China BlueChemical is currently generating about 0.07 per unit of volatility. If you would invest 23.00 in China BlueChemical on September 1, 2024 and sell it today you would earn a total of 1.00 from holding China BlueChemical or generate 4.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
COMMERCIAL VEHICLE vs. China BlueChemical
Performance |
| Timeline |
| COMMERCIAL VEHICLE |
| China BlueChemical |
COMMERCIAL VEHICLE and China BlueChemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with COMMERCIAL VEHICLE and China BlueChemical
The main advantage of trading using opposite COMMERCIAL VEHICLE and China BlueChemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if COMMERCIAL VEHICLE position performs unexpectedly, China BlueChemical 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 BlueChemical will offset losses from the drop in China BlueChemical's long position.| COMMERCIAL VEHICLE vs. SIVERS SEMICONDUCTORS AB | COMMERCIAL VEHICLE vs. Darden Restaurants | COMMERCIAL VEHICLE vs. Reliance Steel Aluminum | COMMERCIAL VEHICLE vs. Q2M Managementberatung AG |
| China BlueChemical vs. Corteva | China BlueChemical vs. Nutrien | China BlueChemical vs. The Mosaic | China BlueChemical vs. CF Industries Holdings |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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