Correlation Between Chinese Maritime and Actron Technology

Can any of the company-specific risk be diversified away by investing in both Chinese Maritime and Actron Technology 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 Chinese Maritime and Actron Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Chinese Maritime Transport and Actron Technology, you can compare the effects of market volatilities on Chinese Maritime and Actron Technology 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 Chinese Maritime with a short position of Actron Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chinese Maritime and Actron Technology.

Diversification Opportunities for Chinese Maritime and Actron Technology

0.25

Correlation Coefficient

Chinese Maritime  Actron Technology

Modest diversification

The 3 months correlation between Chinese and Actron is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Chinese Maritime Transport and Actron Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Actron Technology and Chinese Maritime 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 Chinese Maritime Transport are associated (or correlated) with Actron Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Actron Technology has no effect on the direction of Chinese Maritime i.e., Chinese Maritime and Actron Technology go up and down completely randomly.

Pair Corralation between Chinese Maritime and Actron Technology

Assuming the 90 days trading horizon Chinese Maritime Transport is expected to generate 0.94 times more return on investment than Actron Technology. However, Chinese Maritime Transport is 1.07 times less risky than Actron Technology. It trades about 0.04 of its potential returns per unit of risk. Actron Technology is currently generating about 0.02 per unit of risk. If you would invest  4,130  in Chinese Maritime Transport on September 4, 2024 and sell it today you would earn a total of  130.00  from holding Chinese Maritime Transport or generate 3.15% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Chinese Maritime Transport  vs.  Actron Technology

Chinese Maritime Tra

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Chinese Maritime Transport are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Chinese Maritime is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Actron Technology

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Actron Technology are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Actron Technology is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Chinese Maritime and Actron Technology

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

The idea behind Chinese Maritime Transport and Actron Technology 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.

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.