Correlation Between Columbia Sportswear and China Communications
Can any of the company-specific risk be diversified away by investing in both Columbia Sportswear and China Communications 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 Columbia Sportswear and China Communications into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Columbia Sportswear and China Communications Construction, you can compare the effects of market volatilities on Columbia Sportswear and China Communications 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 Columbia Sportswear with a short position of China Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of Columbia Sportswear and China Communications.
Diversification Opportunities for Columbia Sportswear and China Communications
0.24 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Columbia and China is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Columbia Sportswear and China Communications Construct in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Communications and Columbia Sportswear 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 Columbia Sportswear are associated (or correlated) with China Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Communications has no effect on the direction of Columbia Sportswear i.e., Columbia Sportswear and China Communications go up and down completely randomly.
Pair Corralation between Columbia Sportswear and China Communications
Assuming the 90 days horizon Columbia Sportswear is expected to under-perform the China Communications. In addition to that, Columbia Sportswear is 1.37 times more volatile than China Communications Construction. It trades about -0.1 of its total potential returns per unit of risk. China Communications Construction is currently generating about -0.09 per unit of volatility. If you would invest 67.00 in China Communications Construction on December 29, 2024 and sell it today you would lose (6.00) from holding China Communications Construction or give up 8.96% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 98.41% |
Values | Daily Returns |
Columbia Sportswear vs. China Communications Construct
Performance |
Timeline |
Columbia Sportswear |
China Communications |
Columbia Sportswear and China Communications Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Columbia Sportswear and China Communications
The main advantage of trading using opposite Columbia Sportswear and China Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Columbia Sportswear position performs unexpectedly, China Communications 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 China Communications will offset losses from the drop in China Communications' long position.Columbia Sportswear vs. GungHo Online Entertainment | Columbia Sportswear vs. ZhongAn Online P | Columbia Sportswear vs. Ming Le Sports | Columbia Sportswear vs. BOS BETTER ONLINE |
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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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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