Correlation Between Prada SpA and Chow Tai
Can any of the company-specific risk be diversified away by investing in both Prada SpA and Chow Tai 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 Prada SpA and Chow Tai into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Prada SpA and Chow Tai Fook, you can compare the effects of market volatilities on Prada SpA and Chow Tai 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 Prada SpA with a short position of Chow Tai. Check out your portfolio center. Please also check ongoing floating volatility patterns of Prada SpA and Chow Tai.
Diversification Opportunities for Prada SpA and Chow Tai
Pay attention - limited upside
The 3 months correlation between Prada and Chow is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Prada SpA and Chow Tai Fook in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chow Tai Fook and Prada SpA 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 Prada SpA are associated (or correlated) with Chow Tai. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chow Tai Fook has no effect on the direction of Prada SpA i.e., Prada SpA and Chow Tai go up and down completely randomly.
Pair Corralation between Prada SpA and Chow Tai
Assuming the 90 days horizon Prada SpA is expected to generate 0.74 times more return on investment than Chow Tai. However, Prada SpA is 1.36 times less risky than Chow Tai. It trades about 0.03 of its potential returns per unit of risk. Chow Tai Fook is currently generating about -0.03 per unit of risk. If you would invest 575.00 in Prada SpA on September 3, 2024 and sell it today you would earn a total of 147.00 from holding Prada SpA or generate 25.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 47.07% |
| Values | Daily Returns |
Prada SpA vs. Chow Tai Fook
Performance |
| Timeline |
| Prada SpA |
| Chow Tai Fook |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Prada SpA and Chow Tai Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Prada SpA and Chow Tai
The main advantage of trading using opposite Prada SpA and Chow Tai positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Prada SpA position performs unexpectedly, Chow Tai 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 Chow Tai will offset losses from the drop in Chow Tai's long position.| Prada SpA vs. Compagnie Financiere Richemont | Prada SpA vs. Kering SA | Prada SpA vs. Burberry Group Plc | Prada SpA vs. Swatch Group AG |
| Chow Tai vs. Prada SpA | Chow Tai vs. Christian Dior SE | Chow Tai vs. Prada Spa PK | Chow Tai vs. Christian Dior SE |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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