Correlation Between THORNEY TECHS and China Pacific
Can any of the company-specific risk be diversified away by investing in both THORNEY TECHS and China Pacific 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 THORNEY TECHS and China Pacific into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between THORNEY TECHS LTD and China Pacific Insurance, you can compare the effects of market volatilities on THORNEY TECHS and China Pacific 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 THORNEY TECHS with a short position of China Pacific. Check out your portfolio center. Please also check ongoing floating volatility patterns of THORNEY TECHS and China Pacific.
Diversification Opportunities for THORNEY TECHS and China Pacific
0.31 | Correlation Coefficient |
Weak diversification
The 3 months correlation between THORNEY and China is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding THORNEY TECHS LTD and China Pacific Insurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Pacific Insurance and THORNEY TECHS 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 THORNEY TECHS LTD are associated (or correlated) with China Pacific. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Pacific Insurance has no effect on the direction of THORNEY TECHS i.e., THORNEY TECHS and China Pacific go up and down completely randomly.
Pair Corralation between THORNEY TECHS and China Pacific
Assuming the 90 days horizon THORNEY TECHS LTD is expected to generate 1.52 times more return on investment than China Pacific. However, THORNEY TECHS is 1.52 times more volatile than China Pacific Insurance. It trades about 0.01 of its potential returns per unit of risk. China Pacific Insurance is currently generating about -0.05 per unit of risk. If you would invest 7.45 in THORNEY TECHS LTD on December 3, 2024 and sell it today you would lose (0.20) from holding THORNEY TECHS LTD or give up 2.68% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
THORNEY TECHS LTD vs. China Pacific Insurance
Performance |
| Timeline |
| THORNEY TECHS LTD |
| China Pacific Insurance |
THORNEY TECHS and China Pacific Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with THORNEY TECHS and China Pacific
The main advantage of trading using opposite THORNEY TECHS and China Pacific positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if THORNEY TECHS position performs unexpectedly, China Pacific 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 Pacific will offset losses from the drop in China Pacific's long position.| THORNEY TECHS vs. Aya Gold Silver | THORNEY TECHS vs. Harmony Gold Mining | THORNEY TECHS vs. Cembra Money Bank | THORNEY TECHS vs. OAKTRSPECLENDNEW |
| China Pacific vs. AOI Electronics Co | China Pacific vs. Renesas Electronics | China Pacific vs. UET United Electronic | China Pacific vs. Richardson Electronics |
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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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