Correlation Between CHINA EAST and UNIVMUSIC GRPADR/050
Can any of the company-specific risk be diversified away by investing in both CHINA EAST and UNIVMUSIC GRPADR/050 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 EAST and UNIVMUSIC GRPADR/050 into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CHINA EAST ED and UNIVMUSIC GRPADR050, you can compare the effects of market volatilities on CHINA EAST and UNIVMUSIC GRPADR/050 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 EAST with a short position of UNIVMUSIC GRPADR/050. Check out your portfolio center. Please also check ongoing floating volatility patterns of CHINA EAST and UNIVMUSIC GRPADR/050.
Diversification Opportunities for CHINA EAST and UNIVMUSIC GRPADR/050
-0.36 | Correlation Coefficient |
Very good diversification
The 3 months correlation between CHINA and UNIVMUSIC is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding CHINA EAST ED and UNIVMUSIC GRPADR050 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UNIVMUSIC GRPADR/050 and CHINA EAST 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 EAST ED are associated (or correlated) with UNIVMUSIC GRPADR/050. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of UNIVMUSIC GRPADR/050 has no effect on the direction of CHINA EAST i.e., CHINA EAST and UNIVMUSIC GRPADR/050 go up and down completely randomly.
Pair Corralation between CHINA EAST and UNIVMUSIC GRPADR/050
Assuming the 90 days horizon CHINA EAST ED is expected to under-perform the UNIVMUSIC GRPADR/050. In addition to that, CHINA EAST is 1.05 times more volatile than UNIVMUSIC GRPADR050. It trades about -0.46 of its total potential returns per unit of risk. UNIVMUSIC GRPADR050 is currently generating about -0.04 per unit of volatility. If you would invest 1,190 in UNIVMUSIC GRPADR050 on October 16, 2024 and sell it today you would lose (10.00) from holding UNIVMUSIC GRPADR050 or give up 0.84% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
CHINA EAST ED vs. UNIVMUSIC GRPADR050
Performance |
| Timeline |
| CHINA EAST ED |
| UNIVMUSIC GRPADR/050 |
CHINA EAST and UNIVMUSIC GRPADR/050 Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CHINA EAST and UNIVMUSIC GRPADR/050
The main advantage of trading using opposite CHINA EAST and UNIVMUSIC GRPADR/050 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CHINA EAST position performs unexpectedly, UNIVMUSIC GRPADR/050 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 UNIVMUSIC GRPADR/050 will offset losses from the drop in UNIVMUSIC GRPADR/050's long position.| CHINA EAST vs. JSC Halyk bank | CHINA EAST vs. BANK OF CHINA | CHINA EAST vs. United Insurance Holdings | CHINA EAST vs. Sumitomo Mitsui Construction |
| UNIVMUSIC GRPADR/050 vs. Columbia Sportswear | UNIVMUSIC GRPADR/050 vs. Agilent Technologies | UNIVMUSIC GRPADR/050 vs. SOFI TECHNOLOGIES | UNIVMUSIC GRPADR/050 vs. PLAYWAY SA ZY 10 |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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