Correlation Between Chuangs China and Beazer Homes
Can any of the company-specific risk be diversified away by investing in both Chuangs China and Beazer Homes 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 Chuangs China and Beazer Homes into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Chuangs China Investments and Beazer Homes USA, you can compare the effects of market volatilities on Chuangs China and Beazer Homes 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 Chuangs China with a short position of Beazer Homes. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chuangs China and Beazer Homes.
Diversification Opportunities for Chuangs China and Beazer Homes
0.42 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Chuangs and Beazer is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Chuangs China Investments and Beazer Homes USA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Beazer Homes USA and Chuangs China 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 Chuangs China Investments are associated (or correlated) with Beazer Homes. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Beazer Homes USA has no effect on the direction of Chuangs China i.e., Chuangs China and Beazer Homes go up and down completely randomly.
Pair Corralation between Chuangs China and Beazer Homes
Assuming the 90 days horizon Chuangs China Investments is expected to generate 1.32 times more return on investment than Beazer Homes. However, Chuangs China is 1.32 times more volatile than Beazer Homes USA. It trades about 0.12 of its potential returns per unit of risk. Beazer Homes USA is currently generating about 0.13 per unit of risk. If you would invest 1.00 in Chuangs China Investments on April 24, 2025 and sell it today you would earn a total of 0.25 from holding Chuangs China Investments or generate 25.0% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Chuangs China Investments vs. Beazer Homes USA
Performance |
Timeline |
Chuangs China Investments |
Beazer Homes USA |
Chuangs China and Beazer Homes Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Chuangs China and Beazer Homes
The main advantage of trading using opposite Chuangs China and Beazer Homes positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chuangs China position performs unexpectedly, Beazer Homes 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 Beazer Homes will offset losses from the drop in Beazer Homes' long position.Chuangs China vs. Jupiter Fund Management | Chuangs China vs. Sims Metal Management | Chuangs China vs. Cleanaway Waste Management | Chuangs China vs. AGF Management Limited |
Beazer Homes vs. United Breweries Co | Beazer Homes vs. SEI INVESTMENTS | Beazer Homes vs. National Beverage Corp | Beazer Homes vs. Molson Coors Beverage |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
Other Complementary Tools
Headlines Timeline Stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity | |
Fundamentals Comparison Compare fundamentals across multiple equities to find investing opportunities | |
Bond Analysis Evaluate and analyze corporate bonds as a potential investment for your portfolios. | |
Equity Valuation Check real value of public entities based on technical and fundamental data | |
Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account |