Correlation Between China BlueChemical and Vossloh AG
Can any of the company-specific risk be diversified away by investing in both China BlueChemical and Vossloh AG 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 Vossloh AG into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between China BlueChemical and Vossloh AG, you can compare the effects of market volatilities on China BlueChemical and Vossloh AG 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 Vossloh AG. Check out your portfolio center. Please also check ongoing floating volatility patterns of China BlueChemical and Vossloh AG.
Diversification Opportunities for China BlueChemical and Vossloh AG
-0.09 | Correlation Coefficient |
Good diversification
The 3 months correlation between China and Vossloh is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding China BlueChemical and Vossloh AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vossloh 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 Vossloh AG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vossloh AG has no effect on the direction of China BlueChemical i.e., China BlueChemical and Vossloh AG go up and down completely randomly.
Pair Corralation between China BlueChemical and Vossloh AG
Assuming the 90 days horizon China BlueChemical is expected to generate 3.0 times more return on investment than Vossloh AG. However, China BlueChemical is 3.0 times more volatile than Vossloh AG. It trades about 0.03 of its potential returns per unit of risk. Vossloh AG is currently generating about 0.03 per unit of risk. If you would invest 20.00 in China BlueChemical on September 14, 2024 and sell it today you would earn a total of 5.00 from holding China BlueChemical or generate 25.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
China BlueChemical vs. Vossloh AG
Performance |
| Timeline |
| China BlueChemical |
| Vossloh AG |
China BlueChemical and Vossloh AG Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China BlueChemical and Vossloh AG
The main advantage of trading using opposite China BlueChemical and Vossloh AG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China BlueChemical position performs unexpectedly, Vossloh AG 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 Vossloh AG will offset losses from the drop in Vossloh AG'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 |
| Vossloh AG vs. KINGBOARD CHEMICAL | Vossloh AG vs. Quaker Chemical | Vossloh AG vs. China BlueChemical | Vossloh AG vs. Sekisui Chemical 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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