Correlation Between Gap and COFCO Joycome
Can any of the company-specific risk be diversified away by investing in both Gap and COFCO Joycome 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 Gap and COFCO Joycome into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between The Gap and COFCO Joycome Foods, you can compare the effects of market volatilities on Gap and COFCO Joycome 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 Gap with a short position of COFCO Joycome. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gap and COFCO Joycome.
Diversification Opportunities for Gap and COFCO Joycome
0.19 | Correlation Coefficient |
Average diversification
The 3 months correlation between Gap and COFCO is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding The Gap and COFCO Joycome Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on COFCO Joycome Foods and Gap 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 The Gap are associated (or correlated) with COFCO Joycome. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of COFCO Joycome Foods has no effect on the direction of Gap i.e., Gap and COFCO Joycome go up and down completely randomly.
Pair Corralation between Gap and COFCO Joycome
Assuming the 90 days trading horizon The Gap is expected to generate 1.22 times more return on investment than COFCO Joycome. However, Gap is 1.22 times more volatile than COFCO Joycome Foods. It trades about 0.17 of its potential returns per unit of risk. COFCO Joycome Foods is currently generating about 0.09 per unit of risk. If you would invest 2,077 in The Gap on September 13, 2024 and sell it today you would earn a total of 330.00 from holding The Gap or generate 15.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
The Gap vs. COFCO Joycome Foods
Performance |
| Timeline |
| Gap |
| COFCO Joycome Foods |
Gap and COFCO Joycome Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gap and COFCO Joycome
The main advantage of trading using opposite Gap and COFCO Joycome positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gap position performs unexpectedly, COFCO Joycome 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 COFCO Joycome will offset losses from the drop in COFCO Joycome's long position.| Gap vs. CHINA EDUCATION GROUP | Gap vs. HK Electric Investments | Gap vs. TAL Education Group | Gap vs. Postal Savings Bank |
| COFCO Joycome vs. Hormel Foods | COFCO Joycome vs. Superior Plus Corp | COFCO Joycome vs. SIVERS SEMICONDUCTORS AB | COFCO Joycome vs. NorAm Drilling AS |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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