Correlation Between International Business and Chindata Group

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

Diversification Opportunities for International Business and Chindata Group

0.52
  Correlation Coefficient

Very weak diversification

The 3 months correlation between International and Chindata is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding International Business Machine and Chindata Group Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chindata Group Holdings and International Business 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 International Business Machines are associated (or correlated) with Chindata Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chindata Group Holdings has no effect on the direction of International Business i.e., International Business and Chindata Group go up and down completely randomly.

Pair Corralation between International Business and Chindata Group

Considering the 90-day investment horizon International Business Machines is expected to under-perform the Chindata Group. But the stock apears to be less risky and, when comparing its historical volatility, International Business Machines is 2.43 times less risky than Chindata Group. The stock trades about -0.17 of its potential returns per unit of risk. The Chindata Group Holdings is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest  713.00  in Chindata Group Holdings on May 10, 2022 and sell it today you would lose (19.00)  from holding Chindata Group Holdings or give up 2.66% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy95.45%
ValuesDaily Returns

International Business Machine  vs.  Chindata Group Holdings

 Performance (%) 
       Timeline  
International Business 
International Performance
3 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in International Business Machines are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Even with relatively steady fundamental drivers, International Business is not utilizing all of its potentials. The current stock price chaos, may contribute to medium-term losses for the stakeholders.

International Price Channel

Chindata Group Holdings 
Chindata Performance
6 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Chindata Group Holdings are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental indicators, Chindata Group exhibited solid returns over the last few months and may actually be approaching a breakup point.

Chindata Price Channel

International Business and Chindata Group Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with International Business and Chindata Group

The main advantage of trading using opposite International Business and Chindata Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if International Business position performs unexpectedly, Chindata Group 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 Chindata Group will offset losses from the drop in Chindata Group's long position.
The idea behind International Business Machines and Chindata Group 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.

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