Correlation Between INDCOMMBK CHINA and Bridgestone
Can any of the company-specific risk be diversified away by investing in both INDCOMMBK CHINA and Bridgestone 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 INDCOMMBK CHINA and Bridgestone into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between INDCOMMBK CHINA ADR20 and Bridgestone, you can compare the effects of market volatilities on INDCOMMBK CHINA and Bridgestone 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 INDCOMMBK CHINA with a short position of Bridgestone. Check out your portfolio center. Please also check ongoing floating volatility patterns of INDCOMMBK CHINA and Bridgestone.
Diversification Opportunities for INDCOMMBK CHINA and Bridgestone
-0.52 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between INDCOMMBK and Bridgestone is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding INDCOMMBK CHINA ADR20 and Bridgestone in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bridgestone and INDCOMMBK CHINA 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 INDCOMMBK CHINA ADR20 are associated (or correlated) with Bridgestone. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bridgestone has no effect on the direction of INDCOMMBK CHINA i.e., INDCOMMBK CHINA and Bridgestone go up and down completely randomly.
Pair Corralation between INDCOMMBK CHINA and Bridgestone
Assuming the 90 days trading horizon INDCOMMBK CHINA ADR20 is expected to generate 1.82 times more return on investment than Bridgestone. However, INDCOMMBK CHINA is 1.82 times more volatile than Bridgestone. It trades about 0.07 of its potential returns per unit of risk. Bridgestone is currently generating about -0.1 per unit of risk. If you would invest 1,100 in INDCOMMBK CHINA ADR20 on September 23, 2024 and sell it today you would earn a total of 80.00 from holding INDCOMMBK CHINA ADR20 or generate 7.27% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
INDCOMMBK CHINA ADR20 vs. Bridgestone
Performance |
Timeline |
INDCOMMBK CHINA ADR20 |
Bridgestone |
INDCOMMBK CHINA and Bridgestone Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with INDCOMMBK CHINA and Bridgestone
The main advantage of trading using opposite INDCOMMBK CHINA and Bridgestone positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if INDCOMMBK CHINA position performs unexpectedly, Bridgestone 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 Bridgestone will offset losses from the drop in Bridgestone's long position.INDCOMMBK CHINA vs. Industrial and Commercial | INDCOMMBK CHINA vs. CHINA BANK ADR20 | INDCOMMBK CHINA vs. AGRICULTBK HADR25 YC | INDCOMMBK CHINA vs. BANK OCHINA H |
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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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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