Correlation Between Media and Aluminumof China
Can any of the company-specific risk be diversified away by investing in both Media and Aluminumof China 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 Media and Aluminumof China into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Media and Games and Aluminum of, you can compare the effects of market volatilities on Media and Aluminumof China 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 Media with a short position of Aluminumof China. Check out your portfolio center. Please also check ongoing floating volatility patterns of Media and Aluminumof China.
Diversification Opportunities for Media and Aluminumof China
0.1 | Correlation Coefficient |
Average diversification
The 3 months correlation between Media and Aluminumof is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Media and Games and Aluminum of in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aluminumof China and Media 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 Media and Games are associated (or correlated) with Aluminumof China. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aluminumof China has no effect on the direction of Media i.e., Media and Aluminumof China go up and down completely randomly.
Pair Corralation between Media and Aluminumof China
Assuming the 90 days trading horizon Media and Games is expected to generate 0.92 times more return on investment than Aluminumof China. However, Media and Games is 1.09 times less risky than Aluminumof China. It trades about 0.18 of its potential returns per unit of risk. Aluminum of is currently generating about 0.05 per unit of risk. If you would invest 162.00 in Media and Games on September 3, 2024 and sell it today you would earn a total of 179.00 from holding Media and Games or generate 110.49% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Media and Games vs. Aluminum of
Performance |
| Timeline |
| Media and Games |
| Aluminumof China |
Media and Aluminumof China Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Media and Aluminumof China
The main advantage of trading using opposite Media and Aluminumof China positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Media position performs unexpectedly, Aluminumof China 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 Aluminumof China will offset losses from the drop in Aluminumof China's long position.The idea behind Media and Games and Aluminum of pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Aluminumof China vs. TITANIUM TRANSPORTGROUP | Aluminumof China vs. TSOGO SUN GAMING | Aluminumof China vs. Media and Games | Aluminumof China vs. UNIVMUSIC GRPADR050 |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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