Correlation Between China Communications and Lions Gate
Can any of the company-specific risk be diversified away by investing in both China Communications and Lions Gate 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 Communications and Lions Gate into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between China Communications Services and Lions Gate Entertainment, you can compare the effects of market volatilities on China Communications and Lions Gate 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 Communications with a short position of Lions Gate. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Communications and Lions Gate.
Diversification Opportunities for China Communications and Lions Gate
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between China and Lions is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding China Communications Services and Lions Gate Entertainment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lions Gate Entertainment and China Communications 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 Communications Services are associated (or correlated) with Lions Gate. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lions Gate Entertainment has no effect on the direction of China Communications i.e., China Communications and Lions Gate go up and down completely randomly.
Pair Corralation between China Communications and Lions Gate
Assuming the 90 days horizon China Communications is expected to generate 24.68 times less return on investment than Lions Gate. In addition to that, China Communications is 1.23 times more volatile than Lions Gate Entertainment. It trades about 0.0 of its total potential returns per unit of risk. Lions Gate Entertainment is currently generating about 0.05 per unit of volatility. If you would invest 680.00 in Lions Gate Entertainment on December 28, 2024 and sell it today you would earn a total of 45.00 from holding Lions Gate Entertainment or generate 6.62% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 98.41% |
Values | Daily Returns |
China Communications Services vs. Lions Gate Entertainment
Performance |
Timeline |
China Communications |
Lions Gate Entertainment |
China Communications and Lions Gate Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with China Communications and Lions Gate
The main advantage of trading using opposite China Communications and Lions Gate positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Communications position performs unexpectedly, Lions Gate 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 Lions Gate will offset losses from the drop in Lions Gate's long position.China Communications vs. GAMEON ENTERTAINM TECHS | China Communications vs. National Retail Properties | China Communications vs. OURGAME INTHOLDL 00005 | China Communications vs. CI GAMES SA |
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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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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