Correlation Between Gelsenwasser and China Water
Can any of the company-specific risk be diversified away by investing in both Gelsenwasser 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 Gelsenwasser and China Water into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Gelsenwasser AG and China Water Affairs, you can compare the effects of market volatilities on Gelsenwasser 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 Gelsenwasser with a short position of China Water. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gelsenwasser and China Water.
Diversification Opportunities for Gelsenwasser and China Water
-0.24 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Gelsenwasser and China is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Gelsenwasser AG and China Water Affairs in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Water Affairs and Gelsenwasser 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 Gelsenwasser AG 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 Affairs has no effect on the direction of Gelsenwasser i.e., Gelsenwasser and China Water go up and down completely randomly.
Pair Corralation between Gelsenwasser and China Water
Assuming the 90 days horizon Gelsenwasser AG is expected to under-perform the China Water. But the stock apears to be less risky and, when comparing its historical volatility, Gelsenwasser AG is 2.17 times less risky than China Water. The stock trades about -0.01 of its potential returns per unit of risk. The China Water Affairs is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 38.00 in China Water Affairs on September 23, 2024 and sell it today you would earn a total of 21.00 from holding China Water Affairs or generate 55.26% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Gelsenwasser AG vs. China Water Affairs
Performance |
Timeline |
Gelsenwasser AG |
China Water Affairs |
Gelsenwasser and China Water Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Gelsenwasser and China Water
The main advantage of trading using opposite Gelsenwasser and China Water positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gelsenwasser 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.Gelsenwasser vs. American Water Works | Gelsenwasser vs. Aqua America | Gelsenwasser vs. United Utilities Group | Gelsenwasser vs. Companhia de Saneamento |
China Water vs. American Water Works | China Water vs. Aqua America | China Water vs. United Utilities Group | China Water vs. Companhia de Saneamento |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
Other Complementary Tools
Idea Analyzer Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas | |
Price Transformation Use Price Transformation models to analyze the depth of different equity instruments across global markets | |
Global Markets Map Get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes | |
Portfolio Holdings Check your current holdings and cash postion to detemine if your portfolio needs rebalancing | |
Economic Indicators Top statistical indicators that provide insights into how an economy is performing |