Correlation Between Chinese Maritime and Transcend Information

Can any of the company-specific risk be diversified away by investing in both Chinese Maritime and Transcend Information 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 Chinese Maritime and Transcend Information into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Chinese Maritime Transport and Transcend Information, you can compare the effects of market volatilities on Chinese Maritime and Transcend Information 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 Chinese Maritime with a short position of Transcend Information. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chinese Maritime and Transcend Information.

Diversification Opportunities for Chinese Maritime and Transcend Information

0.23

Correlation Coefficient

Chinese Maritime  Transcend Information

Modest diversification

The 3 months correlation between Chinese and Transcend is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Chinese Maritime Transport and Transcend Information in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Transcend Information and Chinese Maritime 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 Chinese Maritime Transport are associated (or correlated) with Transcend Information. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Transcend Information has no effect on the direction of Chinese Maritime i.e., Chinese Maritime and Transcend Information go up and down completely randomly.

Pair Corralation between Chinese Maritime and Transcend Information

Assuming the 90 days trading horizon Chinese Maritime is expected to generate 25.56 times less return on investment than Transcend Information. In addition to that, Chinese Maritime is 1.01 times more volatile than Transcend Information. It trades about 0.01 of its total potential returns per unit of risk. Transcend Information is currently generating about 0.35 per unit of volatility. If you would invest  8,030  in Transcend Information on February 27, 2024 and sell it today you would earn a total of  3,170  from holding Transcend Information or generate 39.48% return on investment over 90 days.

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

Chinese Maritime Transport  vs.  Transcend Information

Chinese Maritime Tra

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Chinese Maritime Transport are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Chinese Maritime is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Transcend Information

Risk-Adjusted Performance

27 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Transcend Information are ranked lower than 27 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Transcend Information showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Chinese Maritime and Transcend Information

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

The idea behind Chinese Maritime Transport and Transcend Information 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.