Correlation Between China International and Thyssenkrupp
Can any of the company-specific risk be diversified away by investing in both China International and Thyssenkrupp 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 International and Thyssenkrupp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between China International Marine and thyssenkrupp AG, you can compare the effects of market volatilities on China International and Thyssenkrupp 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 International with a short position of Thyssenkrupp. Check out your portfolio center. Please also check ongoing floating volatility patterns of China International and Thyssenkrupp.
Diversification Opportunities for China International and Thyssenkrupp
-0.26 | Correlation Coefficient |
Very good diversification
The 3 months correlation between China and Thyssenkrupp is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding China International Marine and thyssenkrupp AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on thyssenkrupp AG and China International 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 International Marine are associated (or correlated) with Thyssenkrupp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of thyssenkrupp AG has no effect on the direction of China International i.e., China International and Thyssenkrupp go up and down completely randomly.
Pair Corralation between China International and Thyssenkrupp
Assuming the 90 days horizon China International is expected to generate 1.77 times less return on investment than Thyssenkrupp. In addition to that, China International is 1.47 times more volatile than thyssenkrupp AG. It trades about 0.04 of its total potential returns per unit of risk. thyssenkrupp AG is currently generating about 0.1 per unit of volatility. If you would invest 332.00 in thyssenkrupp AG on September 26, 2024 and sell it today you would earn a total of 58.00 from holding thyssenkrupp AG or generate 17.47% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
China International Marine vs. thyssenkrupp AG
Performance |
Timeline |
China International |
thyssenkrupp AG |
China International and Thyssenkrupp Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with China International and Thyssenkrupp
The main advantage of trading using opposite China International and Thyssenkrupp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China International position performs unexpectedly, Thyssenkrupp 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 Thyssenkrupp will offset losses from the drop in Thyssenkrupp's long position.China International vs. Allegheny Technologies Incorporated | China International vs. thyssenkrupp AG | China International vs. thyssenkrupp AG | China International vs. Mueller Industries |
Thyssenkrupp vs. Allegheny Technologies Incorporated | Thyssenkrupp vs. China International Marine | Thyssenkrupp vs. thyssenkrupp AG | Thyssenkrupp vs. Mueller Industries |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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