Correlation Between China BlueChemical and LEWAG HOLDING
Can any of the company-specific risk be diversified away by investing in both China BlueChemical and LEWAG HOLDING 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 LEWAG HOLDING into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between China BlueChemical and LEWAG HOLDING AG, you can compare the effects of market volatilities on China BlueChemical and LEWAG HOLDING 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 LEWAG HOLDING. Check out your portfolio center. Please also check ongoing floating volatility patterns of China BlueChemical and LEWAG HOLDING.
Diversification Opportunities for China BlueChemical and LEWAG HOLDING
-0.47 | Correlation Coefficient |
Very good diversification
The 3 months correlation between China and LEWAG is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding China BlueChemical and LEWAG HOLDING AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LEWAG HOLDING AG 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 LEWAG HOLDING. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LEWAG HOLDING AG has no effect on the direction of China BlueChemical i.e., China BlueChemical and LEWAG HOLDING go up and down completely randomly.
Pair Corralation between China BlueChemical and LEWAG HOLDING
Assuming the 90 days horizon China BlueChemical is expected to generate 28.19 times less return on investment than LEWAG HOLDING. But when comparing it to its historical volatility, China BlueChemical is 1.97 times less risky than LEWAG HOLDING. It trades about 0.02 of its potential returns per unit of risk. LEWAG HOLDING AG is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest 1,050 in LEWAG HOLDING AG on November 3, 2024 and sell it today you would earn a total of 370.00 from holding LEWAG HOLDING AG or generate 35.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
China BlueChemical vs. LEWAG HOLDING AG
Performance |
| Timeline |
| China BlueChemical |
| LEWAG HOLDING AG |
China BlueChemical and LEWAG HOLDING Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China BlueChemical and LEWAG HOLDING
The main advantage of trading using opposite China BlueChemical and LEWAG HOLDING positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China BlueChemical position performs unexpectedly, LEWAG HOLDING 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 LEWAG HOLDING will offset losses from the drop in LEWAG HOLDING's long position.| China BlueChemical vs. Southwest Airlines Co | China BlueChemical vs. United Airlines Holdings | China BlueChemical vs. JAPAN TOBACCO UNSPADR12 | China BlueChemical vs. AEGEAN AIRLINES |
| LEWAG HOLDING vs. Zoom Video Communications | LEWAG HOLDING vs. AEGEAN AIRLINES | LEWAG HOLDING vs. Citic Telecom International | LEWAG HOLDING vs. Chunghwa Telecom Co |
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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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