Correlation Between China Finance and First Tractor
Can any of the company-specific risk be diversified away by investing in both China Finance and First Tractor 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 Finance and First Tractor into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between China Finance Online and First Tractor, you can compare the effects of market volatilities on China Finance and First Tractor 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 Finance with a short position of First Tractor. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Finance and First Tractor.
Diversification Opportunities for China Finance and First Tractor
1.0 | Correlation Coefficient |
No risk reduction
The 3 months correlation between China and First is 1.0. Overlapping area represents the amount of risk that can be diversified away by holding China Finance Online and First Tractor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Tractor and China Finance 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 Finance Online are associated (or correlated) with First Tractor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Tractor has no effect on the direction of China Finance i.e., China Finance and First Tractor go up and down completely randomly.
Pair Corralation between China Finance and First Tractor
Assuming the 90 days horizon China Finance Online is expected to generate 15.36 times more return on investment than First Tractor. However, China Finance is 15.36 times more volatile than First Tractor. It trades about 0.05 of its potential returns per unit of risk. First Tractor is currently generating about 0.05 per unit of risk. If you would invest 0.01 in China Finance Online on September 12, 2024 and sell it today you would earn a total of 0.00 from holding China Finance Online or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 75.57% |
| Values | Daily Returns |
China Finance Online vs. First Tractor
Performance |
| Timeline |
| China Finance Online |
| First Tractor |
China Finance and First Tractor Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Finance and First Tractor
The main advantage of trading using opposite China Finance and First Tractor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Finance position performs unexpectedly, First Tractor 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 First Tractor will offset losses from the drop in First Tractor's long position.| China Finance vs. Dmg Blockchain Solutions | China Finance vs. Cathedra Bitcoin | China Finance vs. Galaxy Digital Holdings | China Finance vs. Neptune Digital Assets |
| First Tractor vs. Copa Holdings SA | First Tractor vs. United Airlines Holdings | First Tractor vs. Delta Air Lines | First Tractor vs. SkyWest |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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