Correlation Between China Taiping and CHESNARA PLC
Can any of the company-specific risk be diversified away by investing in both China Taiping and CHESNARA PLC 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 Taiping and CHESNARA PLC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between China Taiping Insurance and CHESNARA PLC LS 05, you can compare the effects of market volatilities on China Taiping and CHESNARA PLC 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 Taiping with a short position of CHESNARA PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Taiping and CHESNARA PLC.
Diversification Opportunities for China Taiping and CHESNARA PLC
-0.24 | Correlation Coefficient |
Very good diversification
The 3 months correlation between China and CHESNARA is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding China Taiping Insurance and CHESNARA PLC LS 05 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CHESNARA PLC LS and China Taiping 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 Taiping Insurance are associated (or correlated) with CHESNARA PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CHESNARA PLC LS has no effect on the direction of China Taiping i.e., China Taiping and CHESNARA PLC go up and down completely randomly.
Pair Corralation between China Taiping and CHESNARA PLC
Assuming the 90 days trading horizon China Taiping Insurance is expected to under-perform the CHESNARA PLC. In addition to that, China Taiping is 1.06 times more volatile than CHESNARA PLC LS 05. It trades about -0.09 of its total potential returns per unit of risk. CHESNARA PLC LS 05 is currently generating about 0.03 per unit of volatility. If you would invest 314.00 in CHESNARA PLC LS 05 on October 25, 2024 and sell it today you would earn a total of 2.00 from holding CHESNARA PLC LS 05 or generate 0.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 94.44% |
| Values | Daily Returns |
China Taiping Insurance vs. CHESNARA PLC LS 05
Performance |
| Timeline |
| China Taiping Insurance |
| CHESNARA PLC LS |
China Taiping and CHESNARA PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Taiping and CHESNARA PLC
The main advantage of trading using opposite China Taiping and CHESNARA PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Taiping position performs unexpectedly, CHESNARA PLC 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 CHESNARA PLC will offset losses from the drop in CHESNARA PLC's long position.| China Taiping vs. TEXAS ROADHOUSE | China Taiping vs. Goosehead Insurance | China Taiping vs. G III Apparel Group | China Taiping vs. Transport International Holdings |
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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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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