Correlation Between INDCOMMBK CHINA and CLEANTECH LITH
Can any of the company-specific risk be diversified away by investing in both INDCOMMBK CHINA and CLEANTECH LITH 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 CLEANTECH LITH 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 CLEANTECH LITH LS, you can compare the effects of market volatilities on INDCOMMBK CHINA and CLEANTECH LITH 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 CLEANTECH LITH. Check out your portfolio center. Please also check ongoing floating volatility patterns of INDCOMMBK CHINA and CLEANTECH LITH.
Diversification Opportunities for INDCOMMBK CHINA and CLEANTECH LITH
-0.7 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between INDCOMMBK and CLEANTECH is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding INDCOMMBK CHINA ADR20 and CLEANTECH LITH LS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CLEANTECH LITH LS 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 CLEANTECH LITH. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CLEANTECH LITH LS has no effect on the direction of INDCOMMBK CHINA i.e., INDCOMMBK CHINA and CLEANTECH LITH go up and down completely randomly.
Pair Corralation between INDCOMMBK CHINA and CLEANTECH LITH
Assuming the 90 days trading horizon INDCOMMBK CHINA is expected to generate 1.84 times less return on investment than CLEANTECH LITH. In addition to that, INDCOMMBK CHINA is 1.02 times more volatile than CLEANTECH LITH LS. It trades about 0.1 of its total potential returns per unit of risk. CLEANTECH LITH LS is currently generating about 0.19 per unit of volatility. If you would invest 19.00 in CLEANTECH LITH LS on September 15, 2024 and sell it today you would earn a total of 2.00 from holding CLEANTECH LITH LS or generate 10.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
INDCOMMBK CHINA ADR20 vs. CLEANTECH LITH LS
Performance |
| Timeline |
| INDCOMMBK CHINA ADR20 |
| CLEANTECH LITH LS |
INDCOMMBK CHINA and CLEANTECH LITH Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with INDCOMMBK CHINA and CLEANTECH LITH
The main advantage of trading using opposite INDCOMMBK CHINA and CLEANTECH LITH positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if INDCOMMBK CHINA position performs unexpectedly, CLEANTECH LITH 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 CLEANTECH LITH will offset losses from the drop in CLEANTECH LITH's long position.| INDCOMMBK CHINA vs. Natural Health Trends | INDCOMMBK CHINA vs. Sunny Optical Technology | INDCOMMBK CHINA vs. FANDIFI TECHNOLOGY P | INDCOMMBK CHINA vs. ATRYS HEALTH SA |
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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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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