Correlation Between ARDAGH METAL and China Overseas

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

By analyzing existing cross correlation between ARDAGH METAL PACDL 0001 and China Overseas Land, you can compare the effects of market volatilities on ARDAGH METAL and China Overseas 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 ARDAGH METAL with a short position of China Overseas. Check out your portfolio center. Please also check ongoing floating volatility patterns of ARDAGH METAL and China Overseas.

Diversification Opportunities for ARDAGH METAL and China Overseas

0.75

Correlation Coefficient

ARDAGH METAL  China Overseas

Poor diversification

The 3 months correlation between ARDAGH and China is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding ARDAGH METAL PACDL 0001 and China Overseas Land in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Overseas Land and ARDAGH METAL 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 ARDAGH METAL PACDL 0001 are associated (or correlated) with China Overseas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Overseas Land has no effect on the direction of ARDAGH METAL i.e., ARDAGH METAL and China Overseas go up and down completely randomly.

Pair Corralation between ARDAGH METAL and China Overseas

Assuming the 90 days horizon ARDAGH METAL PACDL 0001 is expected to under-perform the China Overseas. In addition to that, ARDAGH METAL is 1.66 times more volatile than China Overseas Land. It trades about -0.16 of its total potential returns per unit of risk. China Overseas Land is currently generating about -0.07 per unit of volatility. If you would invest  159.00  in China Overseas Land on October 26, 2024 and sell it today you would lose (11.00) from holding China Overseas Land or give up 6.92% of portfolio value over 90 days.

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

ARDAGH METAL PACDL 0001  vs.  China Overseas Land

ARDAGH METAL PACDL

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ARDAGH METAL PACDL 0001 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

China Overseas Land

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days China Overseas Land has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with ARDAGH METAL and China Overseas

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

The idea behind ARDAGH METAL PACDL 0001 and China Overseas Land 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.