Correlation Between AGRICULTBK HADR25 and China BlueChemical
Can any of the company-specific risk be diversified away by investing in both AGRICULTBK HADR25 and China BlueChemical 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 AGRICULTBK HADR25 and China BlueChemical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AGRICULTBK HADR25 YC and China BlueChemical, you can compare the effects of market volatilities on AGRICULTBK HADR25 and China BlueChemical 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 AGRICULTBK HADR25 with a short position of China BlueChemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of AGRICULTBK HADR25 and China BlueChemical.
Diversification Opportunities for AGRICULTBK HADR25 and China BlueChemical
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between AGRICULTBK and China is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding AGRICULTBK HADR25 YC and China BlueChemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China BlueChemical and AGRICULTBK HADR25 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 AGRICULTBK HADR25 YC are associated (or correlated) with China BlueChemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China BlueChemical has no effect on the direction of AGRICULTBK HADR25 i.e., AGRICULTBK HADR25 and China BlueChemical go up and down completely randomly.
Pair Corralation between AGRICULTBK HADR25 and China BlueChemical
Assuming the 90 days trading horizon AGRICULTBK HADR25 YC is expected to generate 0.63 times more return on investment than China BlueChemical. However, AGRICULTBK HADR25 YC is 1.59 times less risky than China BlueChemical. It trades about 0.16 of its potential returns per unit of risk. China BlueChemical is currently generating about 0.08 per unit of risk. If you would invest 960.00 in AGRICULTBK HADR25 YC on September 7, 2024 and sell it today you would earn a total of 230.00 from holding AGRICULTBK HADR25 YC or generate 23.96% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
AGRICULTBK HADR25 YC vs. China BlueChemical
Performance |
Timeline |
AGRICULTBK HADR25 |
China BlueChemical |
AGRICULTBK HADR25 and China BlueChemical Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with AGRICULTBK HADR25 and China BlueChemical
The main advantage of trading using opposite AGRICULTBK HADR25 and China BlueChemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AGRICULTBK HADR25 position performs unexpectedly, China BlueChemical 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 BlueChemical will offset losses from the drop in China BlueChemical's long position.AGRICULTBK HADR25 vs. Safety Insurance Group | AGRICULTBK HADR25 vs. Universal Insurance Holdings | AGRICULTBK HADR25 vs. United Insurance Holdings | AGRICULTBK HADR25 vs. SBI Insurance Group |
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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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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