Correlation Between China Tontine and Stagwell

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Can any of the company-specific risk be diversified away by investing in both China Tontine and Stagwell 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 Tontine and Stagwell into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between China Tontine Wines and Stagwell, you can compare the effects of market volatilities on China Tontine and Stagwell 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 Tontine with a short position of Stagwell. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Tontine and Stagwell.

Diversification Opportunities for China Tontine and Stagwell

ChinaStagwellDiversified AwayChinaStagwellDiversified Away100%
0.0
  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between China and Stagwell is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding China Tontine Wines and Stagwell in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stagwell and China Tontine 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 Tontine Wines are associated (or correlated) with Stagwell. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stagwell has no effect on the direction of China Tontine i.e., China Tontine and Stagwell go up and down completely randomly.

Pair Corralation between China Tontine and Stagwell

If you would invest  725.00  in Stagwell on September 13, 2024 and sell it today you would earn a total of  28.00  from holding Stagwell or generate 3.86% return on investment over 90 days.
Time Period3 Months [change]
DirectionFlat 
StrengthInsignificant
Accuracy98.44%
ValuesDaily Returns

China Tontine Wines  vs.  Stagwell

 Performance 
JavaScript chart by amCharts 3.21.15OctNov -10-5051015
JavaScript chart by amCharts 3.21.15CATWF STGW
       Timeline  
China Tontine Wines 

Risk-Adjusted Performance

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Very Weak
Over the last 90 days China Tontine Wines has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, China Tontine is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.
JavaScript chart by amCharts 3.21.15OctNovDecNovDec0.0710.0715
Stagwell 

Risk-Adjusted Performance

2 of 100

 
Weak
 
Strong
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in Stagwell are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable technical and fundamental indicators, Stagwell is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.
JavaScript chart by amCharts 3.21.15OctNovDecNovDec6.577.58

China Tontine and Stagwell Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15 0.010.020.030.040.050.060.07
JavaScript chart by amCharts 3.21.15CATWF STGW
       Returns  

Pair Trading with China Tontine and Stagwell

The main advantage of trading using opposite China Tontine and Stagwell positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Tontine position performs unexpectedly, Stagwell 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 Stagwell will offset losses from the drop in Stagwell's long position.
The idea behind China Tontine Wines and Stagwell 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.
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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.

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