Correlation Between China Metal and Fun Yours
Can any of the company-specific risk be diversified away by investing in both China Metal and Fun Yours 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 Metal and Fun Yours into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between China Metal Products and Fun Yours Technology, you can compare the effects of market volatilities on China Metal and Fun Yours 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 Metal with a short position of Fun Yours. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Metal and Fun Yours.
Diversification Opportunities for China Metal and Fun Yours
-0.41 | Correlation Coefficient |
Very good diversification
The 3 months correlation between China and Fun is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding China Metal Products and Fun Yours Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fun Yours Technology and China Metal 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 Metal Products are associated (or correlated) with Fun Yours. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fun Yours Technology has no effect on the direction of China Metal i.e., China Metal and Fun Yours go up and down completely randomly.
Pair Corralation between China Metal and Fun Yours
Assuming the 90 days trading horizon China Metal Products is expected to under-perform the Fun Yours. But the stock apears to be less risky and, when comparing its historical volatility, China Metal Products is 5.34 times less risky than Fun Yours. The stock trades about -0.05 of its potential returns per unit of risk. The Fun Yours Technology is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 6,094 in Fun Yours Technology on October 9, 2024 and sell it today you would lose (1,054) from holding Fun Yours Technology or give up 17.3% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
China Metal Products vs. Fun Yours Technology
Performance |
Timeline |
China Metal Products |
Fun Yours Technology |
China Metal and Fun Yours Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with China Metal and Fun Yours
The main advantage of trading using opposite China Metal and Fun Yours positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Metal position performs unexpectedly, Fun Yours 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 Fun Yours will offset losses from the drop in Fun Yours' long position.China Metal vs. Basso Industry Corp | China Metal vs. Chung Hsin Electric Machinery | China Metal vs. TYC Brother Industrial | China Metal vs. TECO Electric Machinery |
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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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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