Correlation Between CANADA RARE and China BlueChemical
Can any of the company-specific risk be diversified away by investing in both CANADA RARE 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 CANADA RARE and China BlueChemical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CANADA RARE EARTH and China BlueChemical, you can compare the effects of market volatilities on CANADA RARE 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 CANADA RARE with a short position of China BlueChemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of CANADA RARE and China BlueChemical.
Diversification Opportunities for CANADA RARE and China BlueChemical
0.07 | Correlation Coefficient |
Significant diversification
The 3 months correlation between CANADA and China is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding CANADA RARE EARTH and China BlueChemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China BlueChemical and CANADA RARE 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 CANADA RARE EARTH 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 CANADA RARE i.e., CANADA RARE and China BlueChemical go up and down completely randomly.
Pair Corralation between CANADA RARE and China BlueChemical
Assuming the 90 days trading horizon CANADA RARE EARTH is expected to generate 11.12 times more return on investment than China BlueChemical. However, CANADA RARE is 11.12 times more volatile than China BlueChemical. It trades about 0.14 of its potential returns per unit of risk. China BlueChemical is currently generating about 0.03 per unit of risk. If you would invest 1.70 in CANADA RARE EARTH on September 13, 2024 and sell it today you would lose (0.85) from holding CANADA RARE EARTH or give up 50.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
CANADA RARE EARTH vs. China BlueChemical
Performance |
| Timeline |
| CANADA RARE EARTH |
| China BlueChemical |
CANADA RARE and China BlueChemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CANADA RARE and China BlueChemical
The main advantage of trading using opposite CANADA RARE and China BlueChemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CANADA RARE 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.| CANADA RARE vs. China BlueChemical | CANADA RARE vs. AIR PRODCHEMICALS | CANADA RARE vs. Sanyo Chemical Industries | CANADA RARE vs. Waste Management |
| China BlueChemical vs. Superior Plus Corp | China BlueChemical vs. SIVERS SEMICONDUCTORS AB | China BlueChemical vs. NorAm Drilling AS | China BlueChemical vs. Norsk Hydro ASA |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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