Correlation Between Goodyear Tire and CHINA TONTINE
Can any of the company-specific risk be diversified away by investing in both Goodyear Tire and CHINA TONTINE 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 Goodyear Tire and CHINA TONTINE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Goodyear Tire Rubber and CHINA TONTINE WINES, you can compare the effects of market volatilities on Goodyear Tire and CHINA TONTINE 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 Goodyear Tire with a short position of CHINA TONTINE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Goodyear Tire and CHINA TONTINE.
Diversification Opportunities for Goodyear Tire and CHINA TONTINE
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Goodyear and CHINA is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Goodyear Tire Rubber and CHINA TONTINE WINES in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CHINA TONTINE WINES and Goodyear Tire 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 Goodyear Tire Rubber are associated (or correlated) with CHINA TONTINE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CHINA TONTINE WINES has no effect on the direction of Goodyear Tire i.e., Goodyear Tire and CHINA TONTINE go up and down completely randomly.
Pair Corralation between Goodyear Tire and CHINA TONTINE
Assuming the 90 days trading horizon Goodyear Tire Rubber is expected to under-perform the CHINA TONTINE. But the stock apears to be less risky and, when comparing its historical volatility, Goodyear Tire Rubber is 14.51 times less risky than CHINA TONTINE. The stock trades about -0.01 of its potential returns per unit of risk. The CHINA TONTINE WINES is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 0.70 in CHINA TONTINE WINES on November 7, 2024 and sell it today you would earn a total of 6.30 from holding CHINA TONTINE WINES or generate 900.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Goodyear Tire Rubber vs. CHINA TONTINE WINES
Performance |
| Timeline |
| Goodyear Tire Rubber |
| CHINA TONTINE WINES |
Goodyear Tire and CHINA TONTINE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Goodyear Tire and CHINA TONTINE
The main advantage of trading using opposite Goodyear Tire and CHINA TONTINE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Goodyear Tire position performs unexpectedly, CHINA TONTINE 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 TONTINE will offset losses from the drop in CHINA TONTINE's long position.| Goodyear Tire vs. DALATA HOTEL | Goodyear Tire vs. COVIVIO HOTELS INH | Goodyear Tire vs. SBI Insurance Group | Goodyear Tire vs. Playa Hotels Resorts |
| CHINA TONTINE vs. DAIRY FARM INTL | CHINA TONTINE vs. Applied Materials | CHINA TONTINE vs. Federal Agricultural Mortgage | CHINA TONTINE vs. The Yokohama Rubber |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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