Correlation Between Martin Marietta and China BlueChemical
Can any of the company-specific risk be diversified away by investing in both Martin Marietta and China BlueChemical 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 Martin Marietta and China BlueChemical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Martin Marietta Materials and China BlueChemical, you can compare the effects of market volatilities on Martin Marietta and China BlueChemical 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 Martin Marietta with a short position of China BlueChemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Martin Marietta and China BlueChemical.
Diversification Opportunities for Martin Marietta and China BlueChemical
-0.72 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Martin and China is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding Martin Marietta Materials and China BlueChemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China BlueChemical and Martin Marietta 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 Martin Marietta Materials are associated (or correlated) with China BlueChemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China BlueChemical has no effect on the direction of Martin Marietta i.e., Martin Marietta and China BlueChemical go up and down completely randomly.
Pair Corralation between Martin Marietta and China BlueChemical
Assuming the 90 days trading horizon Martin Marietta Materials is expected to generate 0.41 times more return on investment than China BlueChemical. However, Martin Marietta Materials is 2.43 times less risky than China BlueChemical. It trades about 0.18 of its potential returns per unit of risk. China BlueChemical is currently generating about -0.16 per unit of risk. If you would invest 50,060 in Martin Marietta Materials on November 7, 2024 and sell it today you would earn a total of 2,220 from holding Martin Marietta Materials or generate 4.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Martin Marietta Materials vs. China BlueChemical
Performance |
| Timeline |
| Martin Marietta Materials |
| China BlueChemical |
Martin Marietta and China BlueChemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Martin Marietta and China BlueChemical
The main advantage of trading using opposite Martin Marietta and China BlueChemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Martin Marietta position performs unexpectedly, China BlueChemical 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 BlueChemical will offset losses from the drop in China BlueChemical's long position.| Martin Marietta vs. NAKED WINES PLC | Martin Marietta vs. ecotel communication ag | Martin Marietta vs. HUTCHISON TELECOMM | Martin Marietta vs. CHINA TONTINE WINES |
| China BlueChemical vs. GBS Software AG | China BlueChemical vs. Hochschild Mining plc | China BlueChemical vs. Axway Software SA | China BlueChemical vs. PENN NATL GAMING |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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