Correlation Between Dear Cashmere and AB International
Can any of the company-specific risk be diversified away by investing in both Dear Cashmere and AB International 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 Dear Cashmere and AB International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dear Cashmere Holding and AB International Group, you can compare the effects of market volatilities on Dear Cashmere and AB International 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 Dear Cashmere with a short position of AB International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dear Cashmere and AB International.
Diversification Opportunities for Dear Cashmere and AB International
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Dear and ABQQ is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Dear Cashmere Holding and AB International Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AB International and Dear Cashmere 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 Dear Cashmere Holding are associated (or correlated) with AB International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AB International has no effect on the direction of Dear Cashmere i.e., Dear Cashmere and AB International go up and down completely randomly.
Pair Corralation between Dear Cashmere and AB International
Given the investment horizon of 90 days Dear Cashmere Holding is expected to generate 0.62 times more return on investment than AB International. However, Dear Cashmere Holding is 1.63 times less risky than AB International. It trades about -0.03 of its potential returns per unit of risk. AB International Group is currently generating about -0.05 per unit of risk. If you would invest 14.00 in Dear Cashmere Holding on December 18, 2024 and sell it today you would lose (6.00) from holding Dear Cashmere Holding or give up 42.86% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 98.33% |
Values | Daily Returns |
Dear Cashmere Holding vs. AB International Group
Performance |
Timeline |
Dear Cashmere Holding |
AB International |
Dear Cashmere and AB International Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Dear Cashmere and AB International
The main advantage of trading using opposite Dear Cashmere and AB International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dear Cashmere position performs unexpectedly, AB International 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 AB International will offset losses from the drop in AB International's long position.Dear Cashmere vs. One World Universe | Dear Cashmere vs. All American Pet | Dear Cashmere vs. Ilustrato Pictures | Dear Cashmere vs. Quality Industrial Corp |
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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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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