Correlation Between Changzhou Almaden and CCB Principal

Can any of the company-specific risk be diversified away by investing in both Changzhou Almaden and CCB Principal 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 Changzhou Almaden and CCB Principal into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Changzhou Almaden Co and CCB Principal SSE, you can compare the effects of market volatilities on Changzhou Almaden and CCB Principal 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 Changzhou Almaden with a short position of CCB Principal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Changzhou Almaden and CCB Principal.

Diversification Opportunities for Changzhou Almaden and CCB Principal

0.88

Correlation Coefficient

Changzhou Almaden  CCB Principal

Very poor diversification

The 3 months correlation between Changzhou and CCB is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Changzhou Almaden Co and CCB Principal SSE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CCB Principal SSE and Changzhou Almaden 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 Changzhou Almaden Co are associated (or correlated) with CCB Principal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CCB Principal SSE has no effect on the direction of Changzhou Almaden i.e., Changzhou Almaden and CCB Principal go up and down completely randomly.

Pair Corralation between Changzhou Almaden and CCB Principal

Assuming the 90 days trading horizon Changzhou Almaden is expected to generate 1.0 times less return on investment than CCB Principal. In addition to that, Changzhou Almaden is 1.23 times more volatile than CCB Principal SSE. It trades about 0.1 of its total potential returns per unit of risk. CCB Principal SSE is currently generating about 0.12 per unit of volatility. If you would invest  212.00  in CCB Principal SSE on September 5, 2024 and sell it today you would earn a total of  36.00  from holding CCB Principal SSE or generate 16.98% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	98.28%
Values	Daily Returns

Changzhou Almaden Co  vs.  CCB Principal SSE

Changzhou Almaden

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Changzhou Almaden Co are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Changzhou Almaden sustained solid returns over the last few months and may actually be approaching a breakup point.

CCB Principal SSE

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in CCB Principal SSE are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, CCB Principal sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Changzhou Almaden and CCB Principal

The main advantage of trading using opposite Changzhou Almaden and CCB Principal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Changzhou Almaden position performs unexpectedly, CCB Principal 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 CCB Principal will offset losses from the drop in CCB Principal's long position.

The idea behind Changzhou Almaden Co and CCB Principal SSE pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Stocks Directory module to find actively traded stocks across global markets.