Correlation Between China BlueChemical and MACOM Technology
Can any of the company-specific risk be diversified away by investing in both China BlueChemical and MACOM Technology 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 BlueChemical and MACOM Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between China BlueChemical and MACOM Technology Solutions, you can compare the effects of market volatilities on China BlueChemical and MACOM Technology 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 BlueChemical with a short position of MACOM Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of China BlueChemical and MACOM Technology.
Diversification Opportunities for China BlueChemical and MACOM Technology
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between China and MACOM is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding China BlueChemical and MACOM Technology Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MACOM Technology Sol and China BlueChemical 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 BlueChemical are associated (or correlated) with MACOM Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MACOM Technology Sol has no effect on the direction of China BlueChemical i.e., China BlueChemical and MACOM Technology go up and down completely randomly.
Pair Corralation between China BlueChemical and MACOM Technology
Assuming the 90 days horizon China BlueChemical is expected to generate 1.7 times less return on investment than MACOM Technology. In addition to that, China BlueChemical is 1.53 times more volatile than MACOM Technology Solutions. It trades about 0.03 of its total potential returns per unit of risk. MACOM Technology Solutions is currently generating about 0.07 per unit of volatility. If you would invest 6,300 in MACOM Technology Solutions on November 6, 2024 and sell it today you would earn a total of 6,400 from holding MACOM Technology Solutions or generate 101.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
China BlueChemical vs. MACOM Technology Solutions
Performance |
| Timeline |
| China BlueChemical |
| MACOM Technology Sol |
China BlueChemical and MACOM Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China BlueChemical and MACOM Technology
The main advantage of trading using opposite China BlueChemical and MACOM Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China BlueChemical position performs unexpectedly, MACOM Technology 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 MACOM Technology will offset losses from the drop in MACOM Technology's long position.| China BlueChemical vs. Plastic Omnium | China BlueChemical vs. SOGECLAIR SA INH | China BlueChemical vs. Compagnie Plastic Omnium | China BlueChemical vs. VULCAN MATERIALS |
| MACOM Technology vs. Take Two Interactive Software | MACOM Technology vs. PSI Software AG | MACOM Technology vs. MAG SILVER | MACOM Technology vs. Perseus Mining 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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