Correlation Between THORNEY TECHS and CHINA EDUCATION
Can any of the company-specific risk be diversified away by investing in both THORNEY TECHS and CHINA EDUCATION 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 EDUCATION 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 EDUCATION GROUP, you can compare the effects of market volatilities on THORNEY TECHS and CHINA EDUCATION 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 EDUCATION. Check out your portfolio center. Please also check ongoing floating volatility patterns of THORNEY TECHS and CHINA EDUCATION.
Diversification Opportunities for THORNEY TECHS and CHINA EDUCATION
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between THORNEY and CHINA is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding THORNEY TECHS LTD and CHINA EDUCATION GROUP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CHINA EDUCATION GROUP 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 EDUCATION. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CHINA EDUCATION GROUP has no effect on the direction of THORNEY TECHS i.e., THORNEY TECHS and CHINA EDUCATION go up and down completely randomly.
Pair Corralation between THORNEY TECHS and CHINA EDUCATION
Assuming the 90 days horizon THORNEY TECHS LTD is expected to generate 1.59 times more return on investment than CHINA EDUCATION. However, THORNEY TECHS is 1.59 times more volatile than CHINA EDUCATION GROUP. It trades about 0.05 of its potential returns per unit of risk. CHINA EDUCATION GROUP is currently generating about -0.21 per unit of risk. If you would invest 7.15 in THORNEY TECHS LTD on October 22, 2024 and sell it today you would earn a total of 0.15 from holding THORNEY TECHS LTD or generate 2.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
THORNEY TECHS LTD vs. CHINA EDUCATION GROUP
Performance |
| Timeline |
| THORNEY TECHS LTD |
| CHINA EDUCATION GROUP |
THORNEY TECHS and CHINA EDUCATION Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with THORNEY TECHS and CHINA EDUCATION
The main advantage of trading using opposite THORNEY TECHS and CHINA EDUCATION positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if THORNEY TECHS position performs unexpectedly, CHINA EDUCATION 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 EDUCATION will offset losses from the drop in CHINA EDUCATION's long position.| THORNEY TECHS vs. Apple Inc | THORNEY TECHS vs. Apple Inc | THORNEY TECHS vs. Apple Inc | THORNEY TECHS vs. Apple Inc |
| CHINA EDUCATION vs. LOANDEPOT INC A | CHINA EDUCATION vs. Air Lease | CHINA EDUCATION vs. FUYO GENERAL LEASE | CHINA EDUCATION vs. United Insurance Holdings |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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