Correlation Between GEAR4MUSIC and China Construction
Can any of the company-specific risk be diversified away by investing in both GEAR4MUSIC and China Construction 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 GEAR4MUSIC and China Construction into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GEAR4MUSIC LS 10 and China Construction Bank, you can compare the effects of market volatilities on GEAR4MUSIC and China Construction 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 GEAR4MUSIC with a short position of China Construction. Check out your portfolio center. Please also check ongoing floating volatility patterns of GEAR4MUSIC and China Construction.
Diversification Opportunities for GEAR4MUSIC and China Construction
-0.44 | Correlation Coefficient |
Very good diversification
The 3 months correlation between GEAR4MUSIC and China is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding GEAR4MUSIC LS 10 and China Construction Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Construction Bank and GEAR4MUSIC 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 GEAR4MUSIC LS 10 are associated (or correlated) with China Construction. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Construction Bank has no effect on the direction of GEAR4MUSIC i.e., GEAR4MUSIC and China Construction go up and down completely randomly.
Pair Corralation between GEAR4MUSIC and China Construction
Assuming the 90 days horizon GEAR4MUSIC is expected to generate 1.97 times less return on investment than China Construction. But when comparing it to its historical volatility, GEAR4MUSIC LS 10 is 1.01 times less risky than China Construction. It trades about 0.08 of its potential returns per unit of risk. China Construction Bank is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 72.00 in China Construction Bank on September 12, 2024 and sell it today you would earn a total of 5.00 from holding China Construction Bank or generate 6.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
GEAR4MUSIC LS 10 vs. China Construction Bank
Performance |
| Timeline |
| GEAR4MUSIC LS 10 |
| China Construction Bank |
GEAR4MUSIC and China Construction Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GEAR4MUSIC and China Construction
The main advantage of trading using opposite GEAR4MUSIC and China Construction positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GEAR4MUSIC position performs unexpectedly, China Construction 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 Construction will offset losses from the drop in China Construction's long position.| GEAR4MUSIC vs. PARKEN Sport Entertainment | GEAR4MUSIC vs. LG Display Co | GEAR4MUSIC vs. JD SPORTS FASH | GEAR4MUSIC vs. PLAYTIKA HOLDING DL 01 |
| China Construction vs. Chesapeake Utilities | China Construction vs. AM EAGLE OUTFITTERS | China Construction vs. Playa Hotels Resorts | China Construction vs. Canadian Utilities Limited |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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