Correlation Between Chinese Maritime and China Times

Can any of the company-specific risk be diversified away by investing in both Chinese Maritime and China Times 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 Chinese Maritime and China Times into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Chinese Maritime Transport and China Times Publishing, you can compare the effects of market volatilities on Chinese Maritime and China Times 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 Chinese Maritime with a short position of China Times. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chinese Maritime and China Times.

Diversification Opportunities for Chinese Maritime and China Times

-0.13

Correlation Coefficient

Chinese Maritime  China Times

Good diversification

The 3 months correlation between Chinese and China is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Chinese Maritime Transport and China Times Publishing in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Times Publishing and Chinese Maritime 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 Chinese Maritime Transport are associated (or correlated) with China Times. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Times Publishing has no effect on the direction of Chinese Maritime i.e., Chinese Maritime and China Times go up and down completely randomly.

Pair Corralation between Chinese Maritime and China Times

Assuming the 90 days trading horizon Chinese Maritime Transport is expected to under-perform the China Times. But the stock apears to be less risky and, when comparing its historical volatility, Chinese Maritime Transport is 3.46 times less risky than China Times. The stock trades about -0.52 of its potential returns per unit of risk. The China Times Publishing is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  1,800  in China Times Publishing on September 23, 2024 and sell it today you would earn a total of  150.00  from holding China Times Publishing or generate 8.33% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Chinese Maritime Transport  vs.  China Times Publishing

Chinese Maritime Tra

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Chinese Maritime Transport has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Chinese Maritime is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

China Times Publishing

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in China Times Publishing are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain basic indicators, China Times may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Chinese Maritime and China Times

The main advantage of trading using opposite Chinese Maritime and China Times positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chinese Maritime position performs unexpectedly, China Times 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 Times will offset losses from the drop in China Times' long position.

The idea behind Chinese Maritime Transport and China Times Publishing pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.