Correlation Between China BlueChemical and Seven I
Can any of the company-specific risk be diversified away by investing in both China BlueChemical and Seven I 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 Seven I into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between China BlueChemical and Seven i Holdings, you can compare the effects of market volatilities on China BlueChemical and Seven I 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 Seven I. Check out your portfolio center. Please also check ongoing floating volatility patterns of China BlueChemical and Seven I.
Diversification Opportunities for China BlueChemical and Seven I
0.22 | Correlation Coefficient |
Modest diversification
The 3 months correlation between China and Seven is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding China BlueChemical and Seven i Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Seven i Holdings 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 Seven I. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Seven i Holdings has no effect on the direction of China BlueChemical i.e., China BlueChemical and Seven I go up and down completely randomly.
Pair Corralation between China BlueChemical and Seven I
Assuming the 90 days horizon China BlueChemical is expected to generate 1.53 times less return on investment than Seven I. In addition to that, China BlueChemical is 1.36 times more volatile than Seven i Holdings. It trades about 0.11 of its total potential returns per unit of risk. Seven i Holdings is currently generating about 0.23 per unit of volatility. If you would invest 1,365 in Seven i Holdings on September 13, 2024 and sell it today you would earn a total of 204.00 from holding Seven i Holdings or generate 14.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
China BlueChemical vs. Seven i Holdings
Performance |
| Timeline |
| China BlueChemical |
| Seven i Holdings |
China BlueChemical and Seven I Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China BlueChemical and Seven I
The main advantage of trading using opposite China BlueChemical and Seven I positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China BlueChemical position performs unexpectedly, Seven I 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 Seven I will offset losses from the drop in Seven I's long position.| China BlueChemical vs. Superior Plus Corp | China BlueChemical vs. SIVERS SEMICONDUCTORS AB | China BlueChemical vs. NorAm Drilling AS | China BlueChemical vs. Norsk Hydro ASA |
| Seven I vs. UNIVERSAL MUSIC GROUP | Seven I vs. Transportadora de Gas | Seven I vs. UNIVMUSIC GRPADR050 | Seven I vs. Texas Roadhouse |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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