Correlation Between China Finance and Marlowe Plc

Can any of the company-specific risk be diversified away by investing in both China Finance and Marlowe Plc 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 Finance and Marlowe Plc into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between China Finance Online and Marlowe plc, you can compare the effects of market volatilities on China Finance and Marlowe Plc 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 Finance with a short position of Marlowe Plc. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Finance and Marlowe Plc.

Diversification Opportunities for China Finance and Marlowe Plc

0.0

Correlation Coefficient

China Finance  Marlowe Plc

Pay attention - limited upside

The 3 months correlation between China and Marlowe is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding China Finance Online and Marlowe plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Marlowe plc and China Finance 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 Finance Online are associated (or correlated) with Marlowe Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Marlowe plc has no effect on the direction of China Finance i.e., China Finance and Marlowe Plc go up and down completely randomly.

Pair Corralation between China Finance and Marlowe Plc

Assuming the 90 days horizon China Finance Online is expected to generate 8.51 times more return on investment than Marlowe Plc. However, China Finance is 8.51 times more volatile than Marlowe plc. It trades about 0.03 of its potential returns per unit of risk. Marlowe plc is currently generating about 0.02 per unit of risk. If you would invest  0.25  in China Finance Online on September 20, 2024 and sell it today you would lose (0.25) from holding China Finance Online or give up 100.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

China Finance Online  vs.  Marlowe plc

China Finance Online

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days China Finance Online has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's fundamental indicators remain fairly strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Marlowe plc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Marlowe plc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite abnormal performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with China Finance and Marlowe Plc

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

The idea behind China Finance Online and Marlowe plc 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.

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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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.