Correlation Between China International and Allegheny Technologies
Can any of the company-specific risk be diversified away by investing in both China International and Allegheny Technologies 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 International and Allegheny Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between China International Marine and Allegheny Technologies Incorporated, you can compare the effects of market volatilities on China International and Allegheny Technologies 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 International with a short position of Allegheny Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of China International and Allegheny Technologies.
Diversification Opportunities for China International and Allegheny Technologies
0.11 | Correlation Coefficient |
Average diversification
The 3 months correlation between China and Allegheny is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding China International Marine and Allegheny Technologies Incorpo in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Allegheny Technologies and China International 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 International Marine are associated (or correlated) with Allegheny Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Allegheny Technologies has no effect on the direction of China International i.e., China International and Allegheny Technologies go up and down completely randomly.
Pair Corralation between China International and Allegheny Technologies
Assuming the 90 days horizon China International Marine is expected to under-perform the Allegheny Technologies. In addition to that, China International is 3.22 times more volatile than Allegheny Technologies Incorporated. It trades about -0.17 of its total potential returns per unit of risk. Allegheny Technologies Incorporated is currently generating about -0.06 per unit of volatility. If you would invest 5,382 in Allegheny Technologies Incorporated on October 13, 2024 and sell it today you would lose (60.00) from holding Allegheny Technologies Incorporated or give up 1.11% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
China International Marine vs. Allegheny Technologies Incorpo
Performance |
| Timeline |
| China International |
| Allegheny Technologies |
China International and Allegheny Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China International and Allegheny Technologies
The main advantage of trading using opposite China International and Allegheny Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China International position performs unexpectedly, Allegheny Technologies 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 Allegheny Technologies will offset losses from the drop in Allegheny Technologies' long position.| China International vs. Allegheny Technologies Incorporated | China International vs. Superior Plus Corp | China International vs. NMI Holdings | China International vs. SIVERS SEMICONDUCTORS AB |
| Allegheny Technologies vs. Superior Plus Corp | Allegheny Technologies vs. NMI Holdings | Allegheny Technologies vs. SIVERS SEMICONDUCTORS AB | Allegheny Technologies vs. Talanx AG |
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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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