Correlation Between CHINA SOUTHN and METTLER TOLEDO

Can any of the company-specific risk be diversified away by investing in both CHINA SOUTHN and METTLER TOLEDO 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 SOUTHN and METTLER TOLEDO into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between CHINA SOUTHN AIR H and METTLER TOLEDO INTL, you can compare the effects of market volatilities on CHINA SOUTHN and METTLER TOLEDO 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 SOUTHN with a short position of METTLER TOLEDO. Check out your portfolio center. Please also check ongoing floating volatility patterns of CHINA SOUTHN and METTLER TOLEDO.

Diversification Opportunities for CHINA SOUTHN and METTLER TOLEDO

-0.53

Correlation Coefficient

CHINA SOUTHN  METTLER TOLEDO

Excellent diversification

The 3 months correlation between CHINA and METTLER is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding CHINA SOUTHN AIR H and METTLER TOLEDO INTL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on METTLER TOLEDO INTL and CHINA SOUTHN 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 SOUTHN AIR H are associated (or correlated) with METTLER TOLEDO. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of METTLER TOLEDO INTL has no effect on the direction of CHINA SOUTHN i.e., CHINA SOUTHN and METTLER TOLEDO go up and down completely randomly.

Pair Corralation between CHINA SOUTHN and METTLER TOLEDO

Assuming the 90 days trading horizon CHINA SOUTHN AIR H is expected to under-perform the METTLER TOLEDO. In addition to that, CHINA SOUTHN is 2.84 times more volatile than METTLER TOLEDO INTL. It trades about -0.17 of its total potential returns per unit of risk. METTLER TOLEDO INTL is currently generating about 0.02 per unit of volatility. If you would invest  120,650  in METTLER TOLEDO INTL on October 12, 2024 and sell it today you would earn a total of  350.00  from holding METTLER TOLEDO INTL or generate 0.29% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

CHINA SOUTHN AIR H   vs.  METTLER TOLEDO INTL

CHINA SOUTHN AIR

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in CHINA SOUTHN AIR H are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, CHINA SOUTHN unveiled solid returns over the last few months and may actually be approaching a breakup point.

METTLER TOLEDO INTL

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days METTLER TOLEDO INTL has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with CHINA SOUTHN and METTLER TOLEDO

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

The idea behind CHINA SOUTHN AIR H and METTLER TOLEDO INTL 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.