Correlation Between ATT and China New
Can any of the company-specific risk be diversified away by investing in both ATT and China New 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 ATT and China New into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ATT Inc and China New Energy, you can compare the effects of market volatilities on ATT and China New 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 ATT with a short position of China New. Check out your portfolio center. Please also check ongoing floating volatility patterns of ATT and China New.
Diversification Opportunities for ATT and China New
Excellent diversification
The 3 months correlation between ATT and China is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding ATT Inc and China New Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China New Energy and ATT 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 ATT Inc are associated (or correlated) with China New. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China New Energy has no effect on the direction of ATT i.e., ATT and China New go up and down completely randomly.
Pair Corralation between ATT and China New
Taking into account the 90-day investment horizon ATT is expected to generate 18.93 times less return on investment than China New. But when comparing it to its historical volatility, ATT Inc is 39.39 times less risky than China New. It trades about 0.18 of its potential returns per unit of risk. China New Energy is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 1.50 in China New Energy on September 3, 2024 and sell it today you would lose (0.70) from holding China New Energy or give up 46.67% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
ATT Inc vs. China New Energy
Performance |
| Timeline |
| ATT Inc |
| China New Energy |
ATT and China New Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ATT and China New
The main advantage of trading using opposite ATT and China New positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ATT position performs unexpectedly, China New 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 New will offset losses from the drop in China New's long position.| ATT vs. Highway Holdings Limited | ATT vs. QCR Holdings | ATT vs. Partner Communications | ATT vs. Acumen Pharmaceuticals |
| China New vs. Manaris Corp | China New vs. Green Planet Bio | China New vs. Continental Beverage Brands | China New vs. Opus Magnum Ameris |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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