Correlation Between CHINA STATE and SOLOCAL GROUP
Can any of the company-specific risk be diversified away by investing in both CHINA STATE and SOLOCAL GROUP 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 CHINA STATE and SOLOCAL GROUP into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CHINA STATE STRU and SOLOCAL GROUP, you can compare the effects of market volatilities on CHINA STATE and SOLOCAL GROUP 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 CHINA STATE with a short position of SOLOCAL GROUP. Check out your portfolio center. Please also check ongoing floating volatility patterns of CHINA STATE and SOLOCAL GROUP.
Diversification Opportunities for CHINA STATE and SOLOCAL GROUP
-0.31 | Correlation Coefficient |
Very good diversification
The 3 months correlation between CHINA and SOLOCAL is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding CHINA STATE STRU and SOLOCAL GROUP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SOLOCAL GROUP and CHINA STATE 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 CHINA STATE STRU are associated (or correlated) with SOLOCAL GROUP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SOLOCAL GROUP has no effect on the direction of CHINA STATE i.e., CHINA STATE and SOLOCAL GROUP go up and down completely randomly.
Pair Corralation between CHINA STATE and SOLOCAL GROUP
Assuming the 90 days trading horizon CHINA STATE STRU is expected to generate 0.35 times more return on investment than SOLOCAL GROUP. However, CHINA STATE STRU is 2.87 times less risky than SOLOCAL GROUP. It trades about -0.21 of its potential returns per unit of risk. SOLOCAL GROUP is currently generating about -0.75 per unit of risk. If you would invest 138.00 in CHINA STATE STRU on September 26, 2024 and sell it today you would lose (3.00) from holding CHINA STATE STRU or give up 2.17% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
CHINA STATE STRU vs. SOLOCAL GROUP
Performance |
Timeline |
CHINA STATE STRU |
SOLOCAL GROUP |
CHINA STATE and SOLOCAL GROUP Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with CHINA STATE and SOLOCAL GROUP
The main advantage of trading using opposite CHINA STATE and SOLOCAL GROUP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CHINA STATE position performs unexpectedly, SOLOCAL GROUP 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 SOLOCAL GROUP will offset losses from the drop in SOLOCAL GROUP's long position.CHINA STATE vs. Apple Inc | CHINA STATE vs. Apple Inc | CHINA STATE vs. Microsoft | CHINA STATE vs. Microsoft |
SOLOCAL GROUP vs. Apple Inc | SOLOCAL GROUP vs. Apple Inc | SOLOCAL GROUP vs. Apple Inc | SOLOCAL GROUP vs. Apple Inc |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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