Correlation Between China General and WINSON Machinery
Can any of the company-specific risk be diversified away by investing in both China General and WINSON Machinery 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 China General and WINSON Machinery into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between China General Plastics and WINSON Machinery Co, you can compare the effects of market volatilities on China General and WINSON Machinery 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 China General with a short position of WINSON Machinery. Check out your portfolio center. Please also check ongoing floating volatility patterns of China General and WINSON Machinery.
Diversification Opportunities for China General and WINSON Machinery
0.57 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between China and WINSON is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding China General Plastics and WINSON Machinery Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WINSON Machinery and China General 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 China General Plastics are associated (or correlated) with WINSON Machinery. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WINSON Machinery has no effect on the direction of China General i.e., China General and WINSON Machinery go up and down completely randomly.
Pair Corralation between China General and WINSON Machinery
Assuming the 90 days trading horizon China General Plastics is expected to generate 2.03 times more return on investment than WINSON Machinery. However, China General is 2.03 times more volatile than WINSON Machinery Co. It trades about 0.01 of its potential returns per unit of risk. WINSON Machinery Co is currently generating about -0.36 per unit of risk. If you would invest 1,230 in China General Plastics on October 23, 2024 and sell it today you would earn a total of 0.00 from holding China General Plastics or generate 0.0% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
China General Plastics vs. WINSON Machinery Co
Performance |
Timeline |
China General Plastics |
WINSON Machinery |
China General and WINSON Machinery Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with China General and WINSON Machinery
The main advantage of trading using opposite China General and WINSON Machinery positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China General position performs unexpectedly, WINSON Machinery 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 WINSON Machinery will offset losses from the drop in WINSON Machinery's long position.China General vs. Cathay Real Estate | China General vs. Huaku Development Co | China General vs. BES Engineering Co | China General vs. Prince Housing Development |
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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 Anywhere module to track or share privately all of your investments from the convenience of any device.
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