Correlation Between Carpenter Technology and China International
Can any of the company-specific risk be diversified away by investing in both Carpenter Technology and China International 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 Carpenter Technology and China International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Carpenter Technology and China International Marine, you can compare the effects of market volatilities on Carpenter Technology and China International 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 Carpenter Technology with a short position of China International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Carpenter Technology and China International.
Diversification Opportunities for Carpenter Technology and China International
-0.17 | Correlation Coefficient |
Good diversification
The 3 months correlation between Carpenter and China is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Carpenter Technology and China International Marine in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China International and Carpenter Technology 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 Carpenter Technology are associated (or correlated) with China International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China International has no effect on the direction of Carpenter Technology i.e., Carpenter Technology and China International go up and down completely randomly.
Pair Corralation between Carpenter Technology and China International
Assuming the 90 days horizon Carpenter Technology is expected to generate 1.19 times more return on investment than China International. However, Carpenter Technology is 1.19 times more volatile than China International Marine. It trades about 0.12 of its potential returns per unit of risk. China International Marine is currently generating about -0.11 per unit of risk. If you would invest 14,780 in Carpenter Technology on October 14, 2024 and sell it today you would earn a total of 2,920 from holding Carpenter Technology or generate 19.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Carpenter Technology vs. China International Marine
Performance |
| Timeline |
| Carpenter Technology |
| China International |
Carpenter Technology and China International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Carpenter Technology and China International
The main advantage of trading using opposite Carpenter Technology and China International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Carpenter Technology position performs unexpectedly, China International 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 International will offset losses from the drop in China International's long position.| Carpenter Technology vs. Clean Energy Fuels | Carpenter Technology vs. EAGLE MATERIALS | Carpenter Technology vs. CLEAN ENERGY FUELS | Carpenter Technology vs. Carnegie Clean Energy |
| China International vs. CONTAGIOUS GAMING INC | China International vs. Boyd Gaming | China International vs. Zijin Mining Group | China International vs. GREENX METALS LTD |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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