Correlation Between China BlueChemical and Universal Entertainment
Can any of the company-specific risk be diversified away by investing in both China BlueChemical and Universal Entertainment 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 Universal Entertainment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between China BlueChemical and Universal Entertainment, you can compare the effects of market volatilities on China BlueChemical and Universal Entertainment 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 Universal Entertainment. Check out your portfolio center. Please also check ongoing floating volatility patterns of China BlueChemical and Universal Entertainment.
Diversification Opportunities for China BlueChemical and Universal Entertainment
-0.56 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between China and Universal is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding China BlueChemical and Universal Entertainment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Universal Entertainment 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 Universal Entertainment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Universal Entertainment has no effect on the direction of China BlueChemical i.e., China BlueChemical and Universal Entertainment go up and down completely randomly.
Pair Corralation between China BlueChemical and Universal Entertainment
Assuming the 90 days horizon China BlueChemical is expected to generate 1.11 times more return on investment than Universal Entertainment. However, China BlueChemical is 1.11 times more volatile than Universal Entertainment. It trades about 0.07 of its potential returns per unit of risk. Universal Entertainment is currently generating about -0.06 per unit of risk. If you would invest 21.00 in China BlueChemical on November 7, 2024 and sell it today you would earn a total of 5.00 from holding China BlueChemical or generate 23.81% 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. Universal Entertainment
Performance |
| Timeline |
| China BlueChemical |
| Universal Entertainment |
China BlueChemical and Universal Entertainment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China BlueChemical and Universal Entertainment
The main advantage of trading using opposite China BlueChemical and Universal Entertainment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China BlueChemical position performs unexpectedly, Universal Entertainment 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 Universal Entertainment will offset losses from the drop in Universal Entertainment'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 |
| Universal Entertainment vs. Keck Seng Investments | Universal Entertainment vs. Air Transport Services | Universal Entertainment vs. CHRYSALIS INVESTMENTS LTD | Universal Entertainment vs. SEI INVESTMENTS |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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