Correlation Between Porton Fine and Contemporary Amperex

Can any of the company-specific risk be diversified away by investing in both Porton Fine and Contemporary Amperex 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 Porton Fine and Contemporary Amperex into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Porton Fine Chemicals and Contemporary Amperex Technology, you can compare the effects of market volatilities on Porton Fine and Contemporary Amperex 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 Porton Fine with a short position of Contemporary Amperex. Check out your portfolio center. Please also check ongoing floating volatility patterns of Porton Fine and Contemporary Amperex.

Diversification Opportunities for Porton Fine and Contemporary Amperex

0.62

Correlation Coefficient

Porton Fine  Contemporary Amperex

Poor diversification

The 3 months correlation between Porton and Contemporary is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Porton Fine Chemicals and Contemporary Amperex Technolog in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Contemporary Amperex and Porton Fine 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 Porton Fine Chemicals are associated (or correlated) with Contemporary Amperex. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Contemporary Amperex has no effect on the direction of Porton Fine i.e., Porton Fine and Contemporary Amperex go up and down completely randomly.

Pair Corralation between Porton Fine and Contemporary Amperex

Assuming the 90 days trading horizon Porton Fine Chemicals is expected to under-perform the Contemporary Amperex. In addition to that, Porton Fine is 1.57 times more volatile than Contemporary Amperex Technology. It trades about -0.06 of its total potential returns per unit of risk. Contemporary Amperex Technology is currently generating about -0.06 per unit of volatility. If you would invest  29,900  in Contemporary Amperex Technology on October 7, 2024 and sell it today you would lose (4,137) from holding Contemporary Amperex Technology or give up 13.84% of portfolio value over 90 days.

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

Porton Fine Chemicals  vs.  Contemporary Amperex Technolog

Porton Fine Chemicals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Porton Fine Chemicals has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Contemporary Amperex

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Contemporary Amperex Technology has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Porton Fine and Contemporary Amperex

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

The idea behind Porton Fine Chemicals and Contemporary Amperex Technology 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.

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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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.