Correlation Between Chenming Mold and Associated Industries

Can any of the company-specific risk be diversified away by investing in both Chenming Mold and Associated Industries 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 Chenming Mold and Associated Industries into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Chenming Mold Industrial and Associated Industries China, you can compare the effects of market volatilities on Chenming Mold and Associated Industries 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 Chenming Mold with a short position of Associated Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chenming Mold and Associated Industries.

Diversification Opportunities for Chenming Mold and Associated Industries

-0.02

Correlation Coefficient

Chenming Mold  Associated Industries

Good diversification

The 3 months correlation between Chenming and Associated is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Chenming Mold Industrial and Associated Industries China in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Associated Industries and Chenming Mold 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 Chenming Mold Industrial are associated (or correlated) with Associated Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Associated Industries has no effect on the direction of Chenming Mold i.e., Chenming Mold and Associated Industries go up and down completely randomly.

Pair Corralation between Chenming Mold and Associated Industries

Assuming the 90 days trading horizon Chenming Mold Industrial is expected to under-perform the Associated Industries. In addition to that, Chenming Mold is 1.97 times more volatile than Associated Industries China. It trades about -0.03 of its total potential returns per unit of risk. Associated Industries China is currently generating about -0.03 per unit of volatility. If you would invest  1,230  in Associated Industries China on December 27, 2024 and sell it today you would lose (45.00) from holding Associated Industries China or give up 3.66% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.21%
Values	Daily Returns

Chenming Mold Industrial  vs.  Associated Industries China

Chenming Mold Industrial

Risk-Adjusted Performance

Very Weak

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

Associated Industries

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Chenming Mold and Associated Industries

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

The idea behind Chenming Mold Industrial and Associated Industries China 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.