Correlation Between CDK Global and China Index

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Can any of the company-specific risk be diversified away by investing in both CDK Global and China Index 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 CDK Global and China Index into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CDK Global Holdings and China Index Holdings, you can compare the effects of market volatilities on CDK Global and China Index 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 CDK Global with a short position of China Index. Check out your portfolio center. Please also check ongoing floating volatility patterns of CDK Global and China Index.

Diversification Opportunities for CDK Global and China Index

0.0
  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between CDK and China is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding CDK Global Holdings and China Index Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Index Holdings and CDK Global 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 CDK Global Holdings are associated (or correlated) with China Index. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Index Holdings has no effect on the direction of CDK Global i.e., CDK Global and China Index go up and down completely randomly.

Pair Corralation between CDK Global and China Index

If you would invest  97.00  in China Index Holdings on December 19, 2023 and sell it today you would lose (2.00) from holding China Index Holdings or give up 2.06% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionFlat 
StrengthInsignificant
Accuracy0.68%
ValuesDaily Returns

CDK Global Holdings  vs.  China Index Holdings

 Performance 
       Timeline  
CDK Global Holdings 

Risk-Adjusted Performance

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Very Weak
Over the last 90 days CDK Global Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent fundamental indicators, CDK Global is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.
China Index Holdings 

Risk-Adjusted Performance

0 of 100

 
Low
 
High
Very Weak
Over the last 90 days China Index Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong forward indicators, China Index is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

CDK Global and China Index Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with CDK Global and China Index

The main advantage of trading using opposite CDK Global and China Index positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CDK Global position performs unexpectedly, China Index 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 Index will offset losses from the drop in China Index's long position.
The idea behind CDK Global Holdings and China Index Holdings 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.

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