Correlation Between CHINA SOUTHN and Berkshire Hathaway
Can any of the company-specific risk be diversified away by investing in both CHINA SOUTHN and Berkshire Hathaway 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 Berkshire Hathaway 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 Berkshire Hathaway, you can compare the effects of market volatilities on CHINA SOUTHN and Berkshire Hathaway 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 Berkshire Hathaway. Check out your portfolio center. Please also check ongoing floating volatility patterns of CHINA SOUTHN and Berkshire Hathaway.
Diversification Opportunities for CHINA SOUTHN and Berkshire Hathaway
0.42 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between CHINA and Berkshire is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding CHINA SOUTHN AIR H and Berkshire Hathaway in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Berkshire Hathaway 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 Berkshire Hathaway. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Berkshire Hathaway has no effect on the direction of CHINA SOUTHN i.e., CHINA SOUTHN and Berkshire Hathaway go up and down completely randomly.
Pair Corralation between CHINA SOUTHN and Berkshire Hathaway
Assuming the 90 days trading horizon CHINA SOUTHN AIR H is expected to under-perform the Berkshire Hathaway. In addition to that, CHINA SOUTHN is 2.64 times more volatile than Berkshire Hathaway. It trades about -0.09 of its total potential returns per unit of risk. Berkshire Hathaway is currently generating about 0.06 per unit of volatility. If you would invest 43,500 in Berkshire Hathaway on October 29, 2024 and sell it today you would earn a total of 575.00 from holding Berkshire Hathaway or generate 1.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
CHINA SOUTHN AIR H vs. Berkshire Hathaway
Performance |
| Timeline |
| CHINA SOUTHN AIR |
| Berkshire Hathaway |
CHINA SOUTHN and Berkshire Hathaway Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CHINA SOUTHN and Berkshire Hathaway
The main advantage of trading using opposite CHINA SOUTHN and Berkshire Hathaway positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CHINA SOUTHN position performs unexpectedly, Berkshire Hathaway 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 Berkshire Hathaway will offset losses from the drop in Berkshire Hathaway's long position.| CHINA SOUTHN vs. Apple Inc | CHINA SOUTHN vs. Apple Inc | CHINA SOUTHN vs. Apple Inc | CHINA SOUTHN vs. Apple Inc |
| Berkshire Hathaway vs. China Datang | Berkshire Hathaway vs. WESANA HEALTH HOLD | Berkshire Hathaway vs. CN DATANG C | Berkshire Hathaway vs. Phibro Animal Health |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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