Correlation Between ECHO INVESTMENT and New China
Can any of the company-specific risk be diversified away by investing in both ECHO INVESTMENT and New China 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 ECHO INVESTMENT and New China into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ECHO INVESTMENT ZY and New China Life, you can compare the effects of market volatilities on ECHO INVESTMENT and New China 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 ECHO INVESTMENT with a short position of New China. Check out your portfolio center. Please also check ongoing floating volatility patterns of ECHO INVESTMENT and New China.
Diversification Opportunities for ECHO INVESTMENT and New China
-0.23 | Correlation Coefficient |
Very good diversification
The 3 months correlation between ECHO and New is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding ECHO INVESTMENT ZY and New China Life in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on New China Life and ECHO INVESTMENT 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 ECHO INVESTMENT ZY are associated (or correlated) with New China. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of New China Life has no effect on the direction of ECHO INVESTMENT i.e., ECHO INVESTMENT and New China go up and down completely randomly.
Pair Corralation between ECHO INVESTMENT and New China
Assuming the 90 days horizon ECHO INVESTMENT is expected to generate 218.2 times less return on investment than New China. But when comparing it to its historical volatility, ECHO INVESTMENT ZY is 1.39 times less risky than New China. It trades about 0.0 of its potential returns per unit of risk. New China Life is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 296.00 in New China Life on November 18, 2024 and sell it today you would earn a total of 14.00 from holding New China Life or generate 4.73% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
ECHO INVESTMENT ZY vs. New China Life
Performance |
Timeline |
ECHO INVESTMENT ZY |
New China Life |
ECHO INVESTMENT and New China Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with ECHO INVESTMENT and New China
The main advantage of trading using opposite ECHO INVESTMENT and New China positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ECHO INVESTMENT position performs unexpectedly, New China 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 New China will offset losses from the drop in New China's long position.ECHO INVESTMENT vs. PLAYWAY SA ZY 10 | ||
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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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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