Correlation Between China BlueChemical and SILICON LABORATOR
Can any of the company-specific risk be diversified away by investing in both China BlueChemical and SILICON LABORATOR 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 SILICON LABORATOR into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between China BlueChemical and SILICON LABORATOR, you can compare the effects of market volatilities on China BlueChemical and SILICON LABORATOR 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 SILICON LABORATOR. Check out your portfolio center. Please also check ongoing floating volatility patterns of China BlueChemical and SILICON LABORATOR.
Diversification Opportunities for China BlueChemical and SILICON LABORATOR
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between China and SILICON is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding China BlueChemical and SILICON LABORATOR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SILICON LABORATOR 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 SILICON LABORATOR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SILICON LABORATOR has no effect on the direction of China BlueChemical i.e., China BlueChemical and SILICON LABORATOR go up and down completely randomly.
Pair Corralation between China BlueChemical and SILICON LABORATOR
Assuming the 90 days horizon China BlueChemical is expected to generate 1.28 times less return on investment than SILICON LABORATOR. In addition to that, China BlueChemical is 1.32 times more volatile than SILICON LABORATOR. It trades about 0.07 of its total potential returns per unit of risk. SILICON LABORATOR is currently generating about 0.11 per unit of volatility. If you would invest 9,150 in SILICON LABORATOR on November 7, 2024 and sell it today you would earn a total of 3,550 from holding SILICON LABORATOR or generate 38.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
China BlueChemical vs. SILICON LABORATOR
Performance |
| Timeline |
| China BlueChemical |
| SILICON LABORATOR |
China BlueChemical and SILICON LABORATOR Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China BlueChemical and SILICON LABORATOR
The main advantage of trading using opposite China BlueChemical and SILICON LABORATOR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China BlueChemical position performs unexpectedly, SILICON LABORATOR 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 SILICON LABORATOR will offset losses from the drop in SILICON LABORATOR'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 |
| SILICON LABORATOR vs. Universal Entertainment | SILICON LABORATOR vs. MAANSHAN IRON H | SILICON LABORATOR vs. SQUIRREL MEDIA SA | SILICON LABORATOR vs. STEEL DYNAMICS |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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