Correlation Between China Shenhua and PREMIER FOODS
Can any of the company-specific risk be diversified away by investing in both China Shenhua and PREMIER FOODS 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 Shenhua and PREMIER FOODS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between China Shenhua Energy and PREMIER FOODS, you can compare the effects of market volatilities on China Shenhua and PREMIER FOODS 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 Shenhua with a short position of PREMIER FOODS. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Shenhua and PREMIER FOODS.
Diversification Opportunities for China Shenhua and PREMIER FOODS
0.47 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between China and PREMIER is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding China Shenhua Energy and PREMIER FOODS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PREMIER FOODS and China Shenhua 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 Shenhua Energy are associated (or correlated) with PREMIER FOODS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PREMIER FOODS has no effect on the direction of China Shenhua i.e., China Shenhua and PREMIER FOODS go up and down completely randomly.
Pair Corralation between China Shenhua and PREMIER FOODS
Assuming the 90 days horizon China Shenhua Energy is expected to generate 3.31 times more return on investment than PREMIER FOODS. However, China Shenhua is 3.31 times more volatile than PREMIER FOODS. It trades about 0.07 of its potential returns per unit of risk. PREMIER FOODS is currently generating about 0.1 per unit of risk. If you would invest 126.00 in China Shenhua Energy on September 4, 2024 and sell it today you would earn a total of 265.00 from holding China Shenhua Energy or generate 210.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
China Shenhua Energy vs. PREMIER FOODS
Performance |
| Timeline |
| China Shenhua Energy |
| PREMIER FOODS |
China Shenhua and PREMIER FOODS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Shenhua and PREMIER FOODS
The main advantage of trading using opposite China Shenhua and PREMIER FOODS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Shenhua position performs unexpectedly, PREMIER FOODS 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 PREMIER FOODS will offset losses from the drop in PREMIER FOODS's long position.| China Shenhua vs. PT Bayan Resources | China Shenhua vs. Yanzhou Coal Mining | China Shenhua vs. Yanzhou Coal Mining | China Shenhua vs. PT Adaro Energy |
| PREMIER FOODS vs. TOTAL GABON | PREMIER FOODS vs. Walgreens Boots Alliance | PREMIER FOODS vs. Peak Resources Limited |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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