Correlation Between Stewart Information and China Communications
Can any of the company-specific risk be diversified away by investing in both Stewart Information 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 Stewart Information and China Communications into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Stewart Information Services and China Communications Services, you can compare the effects of market volatilities on Stewart Information 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 Stewart Information with a short position of China Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of Stewart Information and China Communications.
Diversification Opportunities for Stewart Information and China Communications
-0.35 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Stewart and China is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Stewart Information Services and China Communications Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Communications and Stewart Information 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 Stewart Information Services 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 Stewart Information i.e., Stewart Information and China Communications go up and down completely randomly.
Pair Corralation between Stewart Information and China Communications
Assuming the 90 days horizon Stewart Information Services is expected to generate 1.34 times more return on investment than China Communications. However, Stewart Information is 1.34 times more volatile than China Communications Services. It trades about 0.22 of its potential returns per unit of risk. China Communications Services is currently generating about -0.11 per unit of risk. If you would invest 6,350 in Stewart Information Services on August 29, 2024 and sell it today you would earn a total of 650.00 from holding Stewart Information Services or generate 10.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Stewart Information Services vs. China Communications Services
Performance |
| Timeline |
| Stewart Information |
| China Communications |
Stewart Information and China Communications Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Stewart Information and China Communications
The main advantage of trading using opposite Stewart Information and China Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Stewart Information 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.| Stewart Information vs. PICC Property and | Stewart Information vs. QBE Insurance Group | Stewart Information vs. Superior Plus Corp | Stewart Information vs. SIVERS SEMICONDUCTORS AB |
| China Communications vs. Verizon Communications | China Communications vs. ATT Inc | China Communications vs. ATT Inc | China Communications vs. Deutsche Telekom AG |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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