Correlation Between Graham Holdings and CHINA EAST
Can any of the company-specific risk be diversified away by investing in both Graham Holdings and CHINA EAST 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 Graham Holdings and CHINA EAST into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Graham Holdings Co and CHINA EAST ED, you can compare the effects of market volatilities on Graham Holdings and CHINA EAST 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 Graham Holdings with a short position of CHINA EAST. Check out your portfolio center. Please also check ongoing floating volatility patterns of Graham Holdings and CHINA EAST.
Diversification Opportunities for Graham Holdings and CHINA EAST
0.06 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Graham and CHINA is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Graham Holdings Co and CHINA EAST ED in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CHINA EAST ED and Graham Holdings 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 Graham Holdings Co are associated (or correlated) with CHINA EAST. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CHINA EAST ED has no effect on the direction of Graham Holdings i.e., Graham Holdings and CHINA EAST go up and down completely randomly.
Pair Corralation between Graham Holdings and CHINA EAST
Assuming the 90 days trading horizon Graham Holdings Co is expected to generate 0.98 times more return on investment than CHINA EAST. However, Graham Holdings Co is 1.03 times less risky than CHINA EAST. It trades about 0.12 of its potential returns per unit of risk. CHINA EAST ED is currently generating about -0.03 per unit of risk. If you would invest 72,323 in Graham Holdings Co on October 14, 2024 and sell it today you would earn a total of 12,177 from holding Graham Holdings Co or generate 16.84% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Graham Holdings Co vs. CHINA EAST ED
Performance |
| Timeline |
| Graham Holdings |
| CHINA EAST ED |
Graham Holdings and CHINA EAST Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Graham Holdings and CHINA EAST
The main advantage of trading using opposite Graham Holdings and CHINA EAST positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Graham Holdings position performs unexpectedly, CHINA EAST 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 EAST will offset losses from the drop in CHINA EAST's long position.| Graham Holdings vs. GRUPO CARSO A1 | Graham Holdings vs. Computershare Limited | Graham Holdings vs. CRISPR Therapeutics AG | Graham Holdings vs. Zoom Video Communications |
| CHINA EAST vs. BJs Restaurants | CHINA EAST vs. HOCHSCHILD MINING | CHINA EAST vs. Luckin Coffee | CHINA EAST vs. GigaMedia |
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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