Correlation Between URBAN OUTFITTERS and China BlueChemical
Can any of the company-specific risk be diversified away by investing in both URBAN OUTFITTERS and China BlueChemical 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 URBAN OUTFITTERS and China BlueChemical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between URBAN OUTFITTERS and China BlueChemical, you can compare the effects of market volatilities on URBAN OUTFITTERS and China BlueChemical 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 URBAN OUTFITTERS with a short position of China BlueChemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of URBAN OUTFITTERS and China BlueChemical.
Diversification Opportunities for URBAN OUTFITTERS and China BlueChemical
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between URBAN and China is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding URBAN OUTFITTERS and China BlueChemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China BlueChemical and URBAN OUTFITTERS 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 URBAN OUTFITTERS are associated (or correlated) with China BlueChemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China BlueChemical has no effect on the direction of URBAN OUTFITTERS i.e., URBAN OUTFITTERS and China BlueChemical go up and down completely randomly.
Pair Corralation between URBAN OUTFITTERS and China BlueChemical
Assuming the 90 days trading horizon URBAN OUTFITTERS is expected to generate 0.7 times more return on investment than China BlueChemical. However, URBAN OUTFITTERS is 1.43 times less risky than China BlueChemical. It trades about 0.07 of its potential returns per unit of risk. China BlueChemical is currently generating about 0.04 per unit of risk. If you would invest 3,080 in URBAN OUTFITTERS on October 24, 2024 and sell it today you would earn a total of 2,420 from holding URBAN OUTFITTERS or generate 78.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
URBAN OUTFITTERS vs. China BlueChemical
Performance |
| Timeline |
| URBAN OUTFITTERS |
| China BlueChemical |
URBAN OUTFITTERS and China BlueChemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with URBAN OUTFITTERS and China BlueChemical
The main advantage of trading using opposite URBAN OUTFITTERS and China BlueChemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if URBAN OUTFITTERS position performs unexpectedly, China BlueChemical 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 BlueChemical will offset losses from the drop in China BlueChemical's long position.| URBAN OUTFITTERS vs. Meiko Electronics Co | URBAN OUTFITTERS vs. Check Point Software | URBAN OUTFITTERS vs. Take Two Interactive Software | URBAN OUTFITTERS vs. Richardson Electronics |
| China BlueChemical vs. Clean Energy Fuels | China BlueChemical vs. Texas Roadhouse | China BlueChemical vs. Gaztransport Technigaz SA | China BlueChemical vs. Commercial Vehicle Group |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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