Correlation Between China Communications and AURUBIS -

Can any of the company-specific risk be diversified away by investing in both China Communications and AURUBIS - 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 AURUBIS - 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 AURUBIS Dusseldorf, you can compare the effects of market volatilities on China Communications and AURUBIS - 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 AURUBIS -. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Communications and AURUBIS -.

Diversification Opportunities for China Communications and AURUBIS -

0.58

Correlation Coefficient

China Communications  AURUBIS -

Very weak diversification

The 3 months correlation between China and AURUBIS is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding China Communications Services and AURUBIS Dusseldorf in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AURUBIS Dusseldorf 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 AURUBIS -. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AURUBIS Dusseldorf has no effect on the direction of China Communications i.e., China Communications and AURUBIS - go up and down completely randomly.

Pair Corralation between China Communications and AURUBIS -

Assuming the 90 days horizon China Communications is expected to generate 1.36 times less return on investment than AURUBIS -. In addition to that, China Communications is 1.9 times more volatile than AURUBIS Dusseldorf. It trades about 0.06 of its total potential returns per unit of risk. AURUBIS Dusseldorf is currently generating about 0.15 per unit of volatility. If you would invest  7,750  in AURUBIS Dusseldorf on December 21, 2024 and sell it today you would earn a total of  1,390  from holding AURUBIS Dusseldorf or generate 17.94% return on investment over 90 days.

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

China Communications Services  vs.  AURUBIS Dusseldorf

China Communications

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in China Communications Services are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly unfluctuating basic indicators, China Communications reported solid returns over the last few months and may actually be approaching a breakup point.

AURUBIS Dusseldorf

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in AURUBIS Dusseldorf are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, AURUBIS - unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with China Communications and AURUBIS -

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

The idea behind China Communications Services and AURUBIS Dusseldorf 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.