Correlation Between Pampa Energía and China Communications
Can any of the company-specific risk be diversified away by investing in both Pampa Energía and China Communications 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 Pampa Energía and China Communications into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pampa Energa SA and China Communications Services, you can compare the effects of market volatilities on Pampa Energía and China Communications 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 Pampa Energía with a short position of China Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pampa Energía and China Communications.
Diversification Opportunities for Pampa Energía and China Communications
0.38 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Pampa and China is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Pampa Energa SA and China Communications Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Communications and Pampa Energía 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 Pampa Energa SA are associated (or correlated) with China Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Communications has no effect on the direction of Pampa Energía i.e., Pampa Energía and China Communications go up and down completely randomly.
Pair Corralation between Pampa Energía and China Communications
Assuming the 90 days trading horizon Pampa Energa SA is expected to generate 2.26 times more return on investment than China Communications. However, Pampa Energía is 2.26 times more volatile than China Communications Services. It trades about 0.04 of its potential returns per unit of risk. China Communications Services is currently generating about 0.01 per unit of risk. If you would invest 8,400 in Pampa Energa SA on October 24, 2024 and sell it today you would earn a total of 100.00 from holding Pampa Energa SA or generate 1.19% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Pampa Energa SA vs. China Communications Services
Performance |
Timeline |
Pampa Energa SA |
China Communications |
Pampa Energía and China Communications Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Pampa Energía and China Communications
The main advantage of trading using opposite Pampa Energía and China Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pampa Energía position performs unexpectedly, China Communications 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 Communications will offset losses from the drop in China Communications' long position.Pampa Energía vs. Australian Agricultural | Pampa Energía vs. FARM 51 GROUP | Pampa Energía vs. North American Construction | Pampa Energía vs. UNIVMUSIC GRPADR050 |
China Communications vs. WT OFFSHORE | China Communications vs. X FAB Silicon Foundries | China Communications vs. Siamgas And Petrochemicals | China Communications vs. Mitsubishi Gas Chemical |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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