Correlation Between Berkshire Hathaway and Chaoda Modern

Can any of the company-specific risk be diversified away by investing in both Berkshire Hathaway and Chaoda Modern 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 Berkshire Hathaway and Chaoda Modern into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Berkshire Hathaway and Chaoda Modern Agriculture, you can compare the effects of market volatilities on Berkshire Hathaway and Chaoda Modern 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 Berkshire Hathaway with a short position of Chaoda Modern. Check out your portfolio center. Please also check ongoing floating volatility patterns of Berkshire Hathaway and Chaoda Modern.

Diversification Opportunities for Berkshire Hathaway and Chaoda Modern

-0.45

Correlation Coefficient

Berkshire Hathaway  Chaoda Modern

Very good diversification

The 3 months correlation between Berkshire and Chaoda is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Berkshire Hathaway and Chaoda Modern Agriculture in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chaoda Modern Agriculture and Berkshire Hathaway 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 Berkshire Hathaway are associated (or correlated) with Chaoda Modern. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chaoda Modern Agriculture has no effect on the direction of Berkshire Hathaway i.e., Berkshire Hathaway and Chaoda Modern go up and down completely randomly.

Pair Corralation between Berkshire Hathaway and Chaoda Modern

If you would invest  2.00  in Chaoda Modern Agriculture on October 17, 2024 and sell it today you would earn a total of  0.00  from holding Chaoda Modern Agriculture or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Berkshire Hathaway  vs.  Chaoda Modern Agriculture

Berkshire Hathaway

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Berkshire Hathaway are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, Berkshire Hathaway is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Chaoda Modern Agriculture

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Chaoda Modern Agriculture are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Chaoda Modern reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Berkshire Hathaway and Chaoda Modern

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

The idea behind Berkshire Hathaway and Chaoda Modern Agriculture 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.