Correlation Between Chuangs China and SIDETRADE
Can any of the company-specific risk be diversified away by investing in both Chuangs China and SIDETRADE 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 Chuangs China and SIDETRADE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Chuangs China Investments and SIDETRADE EO 1, you can compare the effects of market volatilities on Chuangs China and SIDETRADE 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 Chuangs China with a short position of SIDETRADE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chuangs China and SIDETRADE.
Diversification Opportunities for Chuangs China and SIDETRADE
-0.01 | Correlation Coefficient |
Good diversification
The 3 months correlation between Chuangs and SIDETRADE is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Chuangs China Investments and SIDETRADE EO 1 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SIDETRADE EO 1 and Chuangs China 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 Chuangs China Investments are associated (or correlated) with SIDETRADE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SIDETRADE EO 1 has no effect on the direction of Chuangs China i.e., Chuangs China and SIDETRADE go up and down completely randomly.
Pair Corralation between Chuangs China and SIDETRADE
Assuming the 90 days horizon Chuangs China Investments is expected to under-perform the SIDETRADE. In addition to that, Chuangs China is 2.55 times more volatile than SIDETRADE EO 1. It trades about -0.01 of its total potential returns per unit of risk. SIDETRADE EO 1 is currently generating about 0.04 per unit of volatility. If you would invest 14,900 in SIDETRADE EO 1 on September 23, 2024 and sell it today you would earn a total of 6,500 from holding SIDETRADE EO 1 or generate 43.62% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Chuangs China Investments vs. SIDETRADE EO 1
Performance |
Timeline |
Chuangs China Investments |
SIDETRADE EO 1 |
Chuangs China and SIDETRADE Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Chuangs China and SIDETRADE
The main advantage of trading using opposite Chuangs China and SIDETRADE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chuangs China position performs unexpectedly, SIDETRADE 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 SIDETRADE will offset losses from the drop in SIDETRADE's long position.Chuangs China vs. Sun Hung Kai | Chuangs China vs. China Overseas Land | Chuangs China vs. Longfor Group Holdings | Chuangs China vs. Mitsui Fudosan Co |
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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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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