Correlation Between CHINA EAST and CANON MARKETING

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

By analyzing existing cross correlation between CHINA EAST ED and CANON MARKETING JP, you can compare the effects of market volatilities on CHINA EAST and CANON MARKETING 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 EAST with a short position of CANON MARKETING. Check out your portfolio center. Please also check ongoing floating volatility patterns of CHINA EAST and CANON MARKETING.

Diversification Opportunities for CHINA EAST and CANON MARKETING

-0.29

Correlation Coefficient

CHINA EAST  CANON MARKETING

Very good diversification

The 3 months correlation between CHINA and CANON is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding CHINA EAST ED and CANON MARKETING JP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CANON MARKETING JP and CHINA EAST 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 EAST ED are associated (or correlated) with CANON MARKETING. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CANON MARKETING JP has no effect on the direction of CHINA EAST i.e., CHINA EAST and CANON MARKETING go up and down completely randomly.

Pair Corralation between CHINA EAST and CANON MARKETING

Assuming the 90 days horizon CHINA EAST ED is expected to under-perform the CANON MARKETING. In addition to that, CHINA EAST is 1.36 times more volatile than CANON MARKETING JP. It trades about -0.33 of its total potential returns per unit of risk. CANON MARKETING JP is currently generating about -0.03 per unit of volatility. If you would invest  3,080  in CANON MARKETING JP on October 11, 2024 and sell it today you would lose (20.00) from holding CANON MARKETING JP or give up 0.65% of portfolio value over 90 days.

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

CHINA EAST ED  vs.  CANON MARKETING JP

CHINA EAST ED

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CHINA EAST ED has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

CANON MARKETING JP

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in CANON MARKETING JP are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile forward-looking indicators, CANON MARKETING may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with CHINA EAST and CANON MARKETING

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

The idea behind CHINA EAST ED and CANON MARKETING JP 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.

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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.