Correlation Between Altria and Shineco
Can any of the company-specific risk be diversified away by investing in both Altria and Shineco 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 Altria and Shineco into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Altria Group and Shineco, you can compare the effects of market volatilities on Altria and Shineco 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 Altria with a short position of Shineco. Check out your portfolio center. Please also check ongoing floating volatility patterns of Altria and Shineco.
Diversification Opportunities for Altria and Shineco
Excellent diversification
The 3 months correlation between Altria and Shineco is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Altria Group and Shineco in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shineco and Altria 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 Altria Group are associated (or correlated) with Shineco. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shineco has no effect on the direction of Altria i.e., Altria and Shineco go up and down completely randomly.
Pair Corralation between Altria and Shineco
Allowing for the 90-day total investment horizon Altria Group is expected to generate 0.16 times more return on investment than Shineco. However, Altria Group is 6.27 times less risky than Shineco. It trades about 0.11 of its potential returns per unit of risk. Shineco is currently generating about -0.24 per unit of risk. If you would invest 5,050 in Altria Group on September 17, 2024 and sell it today you would earn a total of 442.00 from holding Altria Group or generate 8.75% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Altria Group vs. Shineco
Performance |
Timeline |
Altria Group |
Shineco |
Altria and Shineco Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Altria and Shineco
The main advantage of trading using opposite Altria and Shineco positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Altria position performs unexpectedly, Shineco 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 Shineco will offset losses from the drop in Shineco's long position.Altria vs. British American Tobacco | Altria vs. Universal | Altria vs. Imperial Brands PLC | Altria vs. Philip Morris International |
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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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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