Correlation Between CHINA SOUTHN and Mizuno
Can any of the company-specific risk be diversified away by investing in both CHINA SOUTHN and Mizuno 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 Mizuno 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 Mizuno, you can compare the effects of market volatilities on CHINA SOUTHN and Mizuno 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 Mizuno. Check out your portfolio center. Please also check ongoing floating volatility patterns of CHINA SOUTHN and Mizuno.
Diversification Opportunities for CHINA SOUTHN and Mizuno
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between CHINA and Mizuno is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding CHINA SOUTHN AIR H and Mizuno in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mizuno 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 Mizuno. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mizuno has no effect on the direction of CHINA SOUTHN i.e., CHINA SOUTHN and Mizuno go up and down completely randomly.
Pair Corralation between CHINA SOUTHN and Mizuno
Assuming the 90 days trading horizon CHINA SOUTHN AIR H is expected to generate 1.11 times more return on investment than Mizuno. However, CHINA SOUTHN is 1.11 times more volatile than Mizuno. It trades about 0.07 of its potential returns per unit of risk. Mizuno is currently generating about 0.07 per unit of risk. If you would invest 40.00 in CHINA SOUTHN AIR H on November 6, 2024 and sell it today you would earn a total of 4.00 from holding CHINA SOUTHN AIR H or generate 10.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
CHINA SOUTHN AIR H vs. Mizuno
Performance |
| Timeline |
| CHINA SOUTHN AIR |
| Mizuno |
CHINA SOUTHN and Mizuno Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CHINA SOUTHN and Mizuno
The main advantage of trading using opposite CHINA SOUTHN and Mizuno positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CHINA SOUTHN position performs unexpectedly, Mizuno 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 Mizuno will offset losses from the drop in Mizuno's long position.| CHINA SOUTHN vs. TreeHouse Foods | CHINA SOUTHN vs. TITANIUM TRANSPORTGROUP | CHINA SOUTHN vs. GWILLI FOOD | CHINA SOUTHN vs. INDOFOOD AGRI RES |
| Mizuno vs. Arrow Electronics | Mizuno vs. TT Electronics PLC | Mizuno vs. ARROW ELECTRONICS | Mizuno vs. STMicroelectronics NV |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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