Correlation Between CHINA FORTUNE and EAST SIDE
Can any of the company-specific risk be diversified away by investing in both CHINA FORTUNE and EAST SIDE 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 FORTUNE and EAST SIDE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CHINA FORTUNE HLDGHD001 and EAST SIDE GAMES, you can compare the effects of market volatilities on CHINA FORTUNE and EAST SIDE 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 FORTUNE with a short position of EAST SIDE. Check out your portfolio center. Please also check ongoing floating volatility patterns of CHINA FORTUNE and EAST SIDE.
Diversification Opportunities for CHINA FORTUNE and EAST SIDE
0.51 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between CHINA and EAST is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding CHINA FORTUNE HLDGHD001 and EAST SIDE GAMES in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EAST SIDE GAMES and CHINA FORTUNE 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 FORTUNE HLDGHD001 are associated (or correlated) with EAST SIDE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EAST SIDE GAMES has no effect on the direction of CHINA FORTUNE i.e., CHINA FORTUNE and EAST SIDE go up and down completely randomly.
Pair Corralation between CHINA FORTUNE and EAST SIDE
Assuming the 90 days trading horizon CHINA FORTUNE HLDGHD001 is expected to generate 18.59 times more return on investment than EAST SIDE. However, CHINA FORTUNE is 18.59 times more volatile than EAST SIDE GAMES. It trades about 0.12 of its potential returns per unit of risk. EAST SIDE GAMES is currently generating about 0.05 per unit of risk. If you would invest 1.10 in CHINA FORTUNE HLDGHD001 on September 14, 2024 and sell it today you would lose (0.25) from holding CHINA FORTUNE HLDGHD001 or give up 22.73% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
CHINA FORTUNE HLDGHD001 vs. EAST SIDE GAMES
Performance |
| Timeline |
| CHINA FORTUNE HLDGHD001 |
| EAST SIDE GAMES |
CHINA FORTUNE and EAST SIDE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CHINA FORTUNE and EAST SIDE
The main advantage of trading using opposite CHINA FORTUNE and EAST SIDE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CHINA FORTUNE position performs unexpectedly, EAST SIDE 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 EAST SIDE will offset losses from the drop in EAST SIDE's long position.| CHINA FORTUNE vs. Samsung Electronics Co | CHINA FORTUNE vs. Sony Group | CHINA FORTUNE vs. Superior Plus Corp | CHINA FORTUNE vs. SIVERS SEMICONDUCTORS AB |
| EAST SIDE vs. NEXON Co | EAST SIDE vs. Take Two Interactive Software | EAST SIDE vs. Superior Plus Corp | EAST SIDE vs. SIVERS SEMICONDUCTORS AB |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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