Correlation Between INDCOMMBK CHINA and CHINA FORTUNE
Can any of the company-specific risk be diversified away by investing in both INDCOMMBK CHINA and CHINA FORTUNE 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 INDCOMMBK CHINA and CHINA FORTUNE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between INDCOMMBK CHINA ADR20 and CHINA FORTUNE HLDGHD001, you can compare the effects of market volatilities on INDCOMMBK CHINA and CHINA FORTUNE 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 INDCOMMBK CHINA with a short position of CHINA FORTUNE. Check out your portfolio center. Please also check ongoing floating volatility patterns of INDCOMMBK CHINA and CHINA FORTUNE.
Diversification Opportunities for INDCOMMBK CHINA and CHINA FORTUNE
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between INDCOMMBK and CHINA is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding INDCOMMBK CHINA ADR20 and CHINA FORTUNE HLDGHD001 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CHINA FORTUNE HLDGHD001 and INDCOMMBK CHINA 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 INDCOMMBK CHINA ADR20 are associated (or correlated) with CHINA FORTUNE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CHINA FORTUNE HLDGHD001 has no effect on the direction of INDCOMMBK CHINA i.e., INDCOMMBK CHINA and CHINA FORTUNE go up and down completely randomly.
Pair Corralation between INDCOMMBK CHINA and CHINA FORTUNE
Assuming the 90 days trading horizon INDCOMMBK CHINA is expected to generate 59.31 times less return on investment than CHINA FORTUNE. But when comparing it to its historical volatility, INDCOMMBK CHINA ADR20 is 46.17 times less risky than CHINA FORTUNE. It trades about 0.09 of its potential returns per unit of risk. CHINA FORTUNE HLDGHD001 is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 1.15 in CHINA FORTUNE HLDGHD001 on November 28, 2024 and sell it today you would earn a total of 0.55 from holding CHINA FORTUNE HLDGHD001 or generate 47.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.7% |
| Values | Daily Returns |
INDCOMMBK CHINA ADR20 vs. CHINA FORTUNE HLDGHD001
Performance |
| Timeline |
| INDCOMMBK CHINA ADR20 |
| CHINA FORTUNE HLDGHD001 |
INDCOMMBK CHINA and CHINA FORTUNE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with INDCOMMBK CHINA and CHINA FORTUNE
The main advantage of trading using opposite INDCOMMBK CHINA and CHINA FORTUNE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if INDCOMMBK CHINA position performs unexpectedly, CHINA FORTUNE 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 CHINA FORTUNE will offset losses from the drop in CHINA FORTUNE's long position.| INDCOMMBK CHINA vs. Air Transport Services | INDCOMMBK CHINA vs. ZINC MEDIA GR | INDCOMMBK CHINA vs. CNVISION MEDIA | INDCOMMBK CHINA vs. ANTA Sports Products |
| CHINA FORTUNE vs. Apple Inc | CHINA FORTUNE vs. Apple Inc | CHINA FORTUNE vs. Samsung Electronics Co | CHINA FORTUNE vs. Samsung Electronics 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 Stocks Directory module to find actively traded stocks across global markets.
Other Complementary Tools
| ETFs Find actively traded Exchange Traded Funds (ETF) from around the world | |
| Portfolio Holdings Check your current holdings and cash postion to detemine if your portfolio needs rebalancing | |
| Volatility Analysis Get historical volatility and risk analysis based on latest market data | |
| Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk | |
| Price Transformation Use Price Transformation models to analyze the depth of different equity instruments across global markets |