Correlation Between CHINA DEVELOPMENT and Cipherlab
Can any of the company-specific risk be diversified away by investing in both CHINA DEVELOPMENT and Cipherlab 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 DEVELOPMENT and Cipherlab into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CHINA DEVELOPMENT FINANCIAL and Cipherlab Co, you can compare the effects of market volatilities on CHINA DEVELOPMENT and Cipherlab 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 DEVELOPMENT with a short position of Cipherlab. Check out your portfolio center. Please also check ongoing floating volatility patterns of CHINA DEVELOPMENT and Cipherlab.
Diversification Opportunities for CHINA DEVELOPMENT and Cipherlab
-0.47 | Correlation Coefficient |
Very good diversification
The 3 months correlation between CHINA and Cipherlab is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding CHINA DEVELOPMENT FINANCIAL and Cipherlab Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cipherlab and CHINA DEVELOPMENT 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 DEVELOPMENT FINANCIAL are associated (or correlated) with Cipherlab. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cipherlab has no effect on the direction of CHINA DEVELOPMENT i.e., CHINA DEVELOPMENT and Cipherlab go up and down completely randomly.
Pair Corralation between CHINA DEVELOPMENT and Cipherlab
Assuming the 90 days trading horizon CHINA DEVELOPMENT FINANCIAL is expected to generate 0.16 times more return on investment than Cipherlab. However, CHINA DEVELOPMENT FINANCIAL is 6.28 times less risky than Cipherlab. It trades about -0.04 of its potential returns per unit of risk. Cipherlab Co is currently generating about -0.12 per unit of risk. If you would invest 786.00 in CHINA DEVELOPMENT FINANCIAL on September 25, 2024 and sell it today you would lose (2.00) from holding CHINA DEVELOPMENT FINANCIAL or give up 0.25% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
CHINA DEVELOPMENT FINANCIAL vs. Cipherlab Co
Performance |
Timeline |
CHINA DEVELOPMENT |
Cipherlab |
CHINA DEVELOPMENT and Cipherlab Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with CHINA DEVELOPMENT and Cipherlab
The main advantage of trading using opposite CHINA DEVELOPMENT and Cipherlab positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CHINA DEVELOPMENT position performs unexpectedly, Cipherlab 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 Cipherlab will offset losses from the drop in Cipherlab's long position.CHINA DEVELOPMENT vs. Fubon Financial Holding | CHINA DEVELOPMENT vs. CTBC Financial Holding | CHINA DEVELOPMENT vs. Khgears International Limited | CHINA DEVELOPMENT vs. Eva Airways Corp |
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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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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