Correlation Between Globex Mining and Chengdu PUTIAN
Can any of the company-specific risk be diversified away by investing in both Globex Mining and Chengdu PUTIAN 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 Globex Mining and Chengdu PUTIAN into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Globex Mining Enterprises and Chengdu PUTIAN Telecommunications, you can compare the effects of market volatilities on Globex Mining and Chengdu PUTIAN 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 Globex Mining with a short position of Chengdu PUTIAN. Check out your portfolio center. Please also check ongoing floating volatility patterns of Globex Mining and Chengdu PUTIAN.
Diversification Opportunities for Globex Mining and Chengdu PUTIAN
0.31 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Globex and Chengdu is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Globex Mining Enterprises and Chengdu PUTIAN Telecommunicati in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chengdu PUTIAN Telec and Globex Mining 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 Globex Mining Enterprises are associated (or correlated) with Chengdu PUTIAN. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chengdu PUTIAN Telec has no effect on the direction of Globex Mining i.e., Globex Mining and Chengdu PUTIAN go up and down completely randomly.
Pair Corralation between Globex Mining and Chengdu PUTIAN
Assuming the 90 days trading horizon Globex Mining is expected to generate 1.5 times less return on investment than Chengdu PUTIAN. But when comparing it to its historical volatility, Globex Mining Enterprises is 4.58 times less risky than Chengdu PUTIAN. It trades about 0.14 of its potential returns per unit of risk. Chengdu PUTIAN Telecommunications is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 6.80 in Chengdu PUTIAN Telecommunications on November 3, 2024 and sell it today you would earn a total of 1.00 from holding Chengdu PUTIAN Telecommunications or generate 14.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.6% |
| Values | Daily Returns |
Globex Mining Enterprises vs. Chengdu PUTIAN Telecommunicati
Performance |
| Timeline |
| Globex Mining Enterprises |
| Chengdu PUTIAN Telec |
Globex Mining and Chengdu PUTIAN Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Globex Mining and Chengdu PUTIAN
The main advantage of trading using opposite Globex Mining and Chengdu PUTIAN positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Globex Mining position performs unexpectedly, Chengdu PUTIAN 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 Chengdu PUTIAN will offset losses from the drop in Chengdu PUTIAN's long position.| Globex Mining vs. HEALTHSTREAM | Globex Mining vs. SHIP HEALTHCARE HLDGINC | Globex Mining vs. ALEFARM BREWING DK 05 | Globex Mining vs. Hanison Construction Holdings |
| Chengdu PUTIAN vs. CARDINAL HEALTH | Chengdu PUTIAN vs. SENECA FOODS A | Chengdu PUTIAN vs. Universal Health Realty | Chengdu PUTIAN vs. Cal Maine Foods |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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