Correlation Between China International and Mueller Industries
Can any of the company-specific risk be diversified away by investing in both China International and Mueller Industries 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 Mueller Industries 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 Mueller Industries, you can compare the effects of market volatilities on China International and Mueller Industries 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 Mueller Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of China International and Mueller Industries.
Diversification Opportunities for China International and Mueller Industries
0.39 | Correlation Coefficient |
Weak diversification
The 3 months correlation between China and Mueller is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding China International Marine and Mueller Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mueller Industries 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 Mueller Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mueller Industries has no effect on the direction of China International i.e., China International and Mueller Industries go up and down completely randomly.
Pair Corralation between China International and Mueller Industries
Assuming the 90 days horizon China International Marine is expected to under-perform the Mueller Industries. But the stock apears to be less risky and, when comparing its historical volatility, China International Marine is 1.7 times less risky than Mueller Industries. The stock trades about -0.11 of its potential returns per unit of risk. The Mueller Industries is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 6,482 in Mueller Industries on October 14, 2024 and sell it today you would earn a total of 1,068 from holding Mueller Industries or generate 16.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
China International Marine vs. Mueller Industries
Performance |
| Timeline |
| China International |
| Mueller Industries |
China International and Mueller Industries Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China International and Mueller Industries
The main advantage of trading using opposite China International and Mueller Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China International position performs unexpectedly, Mueller Industries 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 Mueller Industries will offset losses from the drop in Mueller Industries' long position.| China International vs. CONTAGIOUS GAMING INC | China International vs. Boyd Gaming | China International vs. Zijin Mining Group | China International vs. GREENX METALS LTD |
| Mueller Industries vs. BANKINTER ADR 2007 | Mueller Industries vs. CHRYSALIS INVESTMENTS LTD | Mueller Industries vs. Keck Seng Investments | Mueller Industries vs. Direct Line Insurance |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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