Correlation Between Birchcliff Energy and China Foods
Can any of the company-specific risk be diversified away by investing in both Birchcliff Energy and China Foods 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 Birchcliff Energy and China Foods into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Birchcliff Energy and China Foods Ltd, you can compare the effects of market volatilities on Birchcliff Energy and China Foods 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 Birchcliff Energy with a short position of China Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of Birchcliff Energy and China Foods.
Diversification Opportunities for Birchcliff Energy and China Foods
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Birchcliff and China is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Birchcliff Energy and China Foods Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Foods and Birchcliff Energy 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 Birchcliff Energy are associated (or correlated) with China Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Foods has no effect on the direction of Birchcliff Energy i.e., Birchcliff Energy and China Foods go up and down completely randomly.
Pair Corralation between Birchcliff Energy and China Foods
Assuming the 90 days trading horizon Birchcliff Energy is expected to under-perform the China Foods. In addition to that, Birchcliff Energy is 1.17 times more volatile than China Foods Ltd. It trades about -0.02 of its total potential returns per unit of risk. China Foods Ltd is currently generating about 0.03 per unit of volatility. If you would invest 632.00 in China Foods Ltd on January 26, 2024 and sell it today you would earn a total of 133.00 from holding China Foods Ltd or generate 21.04% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 95.56% |
Values | Daily Returns |
Birchcliff Energy vs. China Foods Ltd
Performance |
Timeline |
Birchcliff Energy |
China Foods |
Birchcliff Energy and China Foods Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Birchcliff Energy and China Foods
The main advantage of trading using opposite Birchcliff Energy and China Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Birchcliff Energy position performs unexpectedly, China Foods 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 China Foods will offset losses from the drop in China Foods' long position.Birchcliff Energy vs. WesCan Energy Corp | Birchcliff Energy vs. Crown Point Energy | Birchcliff Energy vs. Sintana Energy | Birchcliff Energy vs. Marksmen Energy |
China Foods vs. National Beverage Corp | China Foods vs. Celsius Holdings | China Foods vs. Monster Beverage Corp | China Foods vs. Coca Cola Femsa SAB |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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