Correlation Between Ross Stores and CHINA SHENHUA
Can any of the company-specific risk be diversified away by investing in both Ross Stores and CHINA SHENHUA 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 Ross Stores and CHINA SHENHUA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ross Stores and CHINA SHENHUA ENA, you can compare the effects of market volatilities on Ross Stores and CHINA SHENHUA 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 Ross Stores with a short position of CHINA SHENHUA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ross Stores and CHINA SHENHUA.
Diversification Opportunities for Ross Stores and CHINA SHENHUA
-0.26 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Ross and CHINA is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Ross Stores and CHINA SHENHUA ENA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CHINA SHENHUA ENA and Ross Stores 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 Ross Stores are associated (or correlated) with CHINA SHENHUA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CHINA SHENHUA ENA has no effect on the direction of Ross Stores i.e., Ross Stores and CHINA SHENHUA go up and down completely randomly.
Pair Corralation between Ross Stores and CHINA SHENHUA
Assuming the 90 days trading horizon Ross Stores is expected to generate 0.68 times more return on investment than CHINA SHENHUA. However, Ross Stores is 1.46 times less risky than CHINA SHENHUA. It trades about 0.05 of its potential returns per unit of risk. CHINA SHENHUA ENA is currently generating about -0.02 per unit of risk. If you would invest 13,294 in Ross Stores on September 5, 2024 and sell it today you would earn a total of 1,354 from holding Ross Stores or generate 10.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ross Stores vs. CHINA SHENHUA ENA
Performance |
| Timeline |
| Ross Stores |
| CHINA SHENHUA ENA |
Ross Stores and CHINA SHENHUA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ross Stores and CHINA SHENHUA
The main advantage of trading using opposite Ross Stores and CHINA SHENHUA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ross Stores position performs unexpectedly, CHINA SHENHUA 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 SHENHUA will offset losses from the drop in CHINA SHENHUA's long position.| Ross Stores vs. TOTAL GABON | Ross Stores vs. Walgreens Boots Alliance | Ross Stores vs. Peak Resources Limited |
| CHINA SHENHUA vs. PICKN PAY STORES | CHINA SHENHUA vs. BJs Wholesale Club | CHINA SHENHUA vs. Vastned Retail NV | CHINA SHENHUA vs. Ross Stores |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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