Correlation Between SAFETY MEDICAL and China Communications
Can any of the company-specific risk be diversified away by investing in both SAFETY MEDICAL and China Communications 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 SAFETY MEDICAL and China Communications into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SAFETY MEDICAL PROD and China Communications Services, you can compare the effects of market volatilities on SAFETY MEDICAL and China Communications 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 SAFETY MEDICAL with a short position of China Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of SAFETY MEDICAL and China Communications.
Diversification Opportunities for SAFETY MEDICAL and China Communications
-0.17 | Correlation Coefficient |
Good diversification
The 3 months correlation between SAFETY and China is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding SAFETY MEDICAL PROD and China Communications Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Communications and SAFETY MEDICAL 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 SAFETY MEDICAL PROD are associated (or correlated) with China Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Communications has no effect on the direction of SAFETY MEDICAL i.e., SAFETY MEDICAL and China Communications go up and down completely randomly.
Pair Corralation between SAFETY MEDICAL and China Communications
Assuming the 90 days trading horizon SAFETY MEDICAL PROD is expected to under-perform the China Communications. In addition to that, SAFETY MEDICAL is 1.88 times more volatile than China Communications Services. It trades about -0.14 of its total potential returns per unit of risk. China Communications Services is currently generating about 0.01 per unit of volatility. If you would invest 48.00 in China Communications Services on September 2, 2024 and sell it today you would earn a total of 0.00 from holding China Communications Services or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
SAFETY MEDICAL PROD vs. China Communications Services
Performance |
| Timeline |
| SAFETY MEDICAL PROD |
| China Communications |
SAFETY MEDICAL and China Communications Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SAFETY MEDICAL and China Communications
The main advantage of trading using opposite SAFETY MEDICAL and China Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SAFETY MEDICAL position performs unexpectedly, China Communications 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 Communications will offset losses from the drop in China Communications' long position.| SAFETY MEDICAL vs. SIVERS SEMICONDUCTORS AB | SAFETY MEDICAL vs. Darden Restaurants | SAFETY MEDICAL vs. Reliance Steel Aluminum | SAFETY MEDICAL vs. Q2M Managementberatung AG |
| China Communications vs. Deutsche Telekom AG | China Communications vs. Superior Plus Corp | China Communications vs. NMI Holdings | China Communications vs. Origin Agritech |
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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