Correlation Between CHINA SOUTHN and Virtu Financial
Can any of the company-specific risk be diversified away by investing in both CHINA SOUTHN and Virtu Financial 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 CHINA SOUTHN and Virtu Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CHINA SOUTHN AIR H and Virtu Financial, you can compare the effects of market volatilities on CHINA SOUTHN and Virtu Financial 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 CHINA SOUTHN with a short position of Virtu Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of CHINA SOUTHN and Virtu Financial.
Diversification Opportunities for CHINA SOUTHN and Virtu Financial
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between CHINA and Virtu is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding CHINA SOUTHN AIR H and Virtu Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Virtu Financial and CHINA SOUTHN 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 CHINA SOUTHN AIR H are associated (or correlated) with Virtu Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Virtu Financial has no effect on the direction of CHINA SOUTHN i.e., CHINA SOUTHN and Virtu Financial go up and down completely randomly.
Pair Corralation between CHINA SOUTHN and Virtu Financial
Assuming the 90 days trading horizon CHINA SOUTHN AIR H is expected to under-perform the Virtu Financial. In addition to that, CHINA SOUTHN is 1.47 times more volatile than Virtu Financial. It trades about -0.01 of its total potential returns per unit of risk. Virtu Financial is currently generating about 0.08 per unit of volatility. If you would invest 1,653 in Virtu Financial on October 12, 2024 and sell it today you would earn a total of 1,907 from holding Virtu Financial or generate 115.37% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.8% |
| Values | Daily Returns |
CHINA SOUTHN AIR H vs. Virtu Financial
Performance |
| Timeline |
| CHINA SOUTHN AIR |
| Virtu Financial |
CHINA SOUTHN and Virtu Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CHINA SOUTHN and Virtu Financial
The main advantage of trading using opposite CHINA SOUTHN and Virtu Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CHINA SOUTHN position performs unexpectedly, Virtu Financial 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 Virtu Financial will offset losses from the drop in Virtu Financial's long position.| CHINA SOUTHN vs. Insurance Australia Group | CHINA SOUTHN vs. QBE Insurance Group | CHINA SOUTHN vs. SBI Insurance Group | CHINA SOUTHN vs. Reinsurance Group of |
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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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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