Correlation Between TRAINLINE PLC and CHINA WATER
Can any of the company-specific risk be diversified away by investing in both TRAINLINE PLC and CHINA WATER 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 TRAINLINE PLC and CHINA WATER into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between TRAINLINE PLC LS and CHINA WATER IGR, you can compare the effects of market volatilities on TRAINLINE PLC and CHINA WATER 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 TRAINLINE PLC with a short position of CHINA WATER. Check out your portfolio center. Please also check ongoing floating volatility patterns of TRAINLINE PLC and CHINA WATER.
Diversification Opportunities for TRAINLINE PLC and CHINA WATER
-0.91 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between TRAINLINE and CHINA is -0.91. Overlapping area represents the amount of risk that can be diversified away by holding TRAINLINE PLC LS and CHINA WATER IGR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CHINA WATER IGR and TRAINLINE PLC 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 TRAINLINE PLC LS are associated (or correlated) with CHINA WATER. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CHINA WATER IGR has no effect on the direction of TRAINLINE PLC i.e., TRAINLINE PLC and CHINA WATER go up and down completely randomly.
Pair Corralation between TRAINLINE PLC and CHINA WATER
Assuming the 90 days trading horizon TRAINLINE PLC LS is expected to generate 0.14 times more return on investment than CHINA WATER. However, TRAINLINE PLC LS is 6.9 times less risky than CHINA WATER. It trades about 0.18 of its potential returns per unit of risk. CHINA WATER IGR is currently generating about -0.07 per unit of risk. If you would invest 482.00 in TRAINLINE PLC LS on September 25, 2024 and sell it today you would earn a total of 28.00 from holding TRAINLINE PLC LS or generate 5.81% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
TRAINLINE PLC LS vs. CHINA WATER IGR
Performance |
Timeline |
TRAINLINE PLC LS |
CHINA WATER IGR |
TRAINLINE PLC and CHINA WATER Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with TRAINLINE PLC and CHINA WATER
The main advantage of trading using opposite TRAINLINE PLC and CHINA WATER positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TRAINLINE PLC position performs unexpectedly, CHINA WATER 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 CHINA WATER will offset losses from the drop in CHINA WATER's long position.TRAINLINE PLC vs. TRIPCOM GROUP DL 00125 | TRAINLINE PLC vs. TUI AG | TRAINLINE PLC vs. TripAdvisor | TRAINLINE PLC vs. MakeMyTrip Limited |
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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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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