Correlation Between SPORTING and China Communications
Can any of the company-specific risk be diversified away by investing in both SPORTING 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 SPORTING and China Communications into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SPORTING and China Communications Services, you can compare the effects of market volatilities on SPORTING 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 SPORTING with a short position of China Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPORTING and China Communications.
Diversification Opportunities for SPORTING and China Communications
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between SPORTING and China is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding SPORTING and China Communications Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Communications and SPORTING 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 SPORTING 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 SPORTING i.e., SPORTING and China Communications go up and down completely randomly.
Pair Corralation between SPORTING and China Communications
Assuming the 90 days trading horizon SPORTING is expected to generate 4.61 times less return on investment than China Communications. But when comparing it to its historical volatility, SPORTING is 3.43 times less risky than China Communications. It trades about 0.05 of its potential returns per unit of risk. China Communications Services is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 13.00 in China Communications Services on September 2, 2024 and sell it today you would earn a total of 35.00 from holding China Communications Services or generate 269.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
SPORTING vs. China Communications Services
Performance |
| Timeline |
| SPORTING |
| China Communications |
SPORTING and China Communications Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SPORTING and China Communications
The main advantage of trading using opposite SPORTING and China Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SPORTING 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.| SPORTING vs. SIVERS SEMICONDUCTORS AB | SPORTING vs. Darden Restaurants | SPORTING vs. Reliance Steel Aluminum | SPORTING 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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