Correlation Between New China and Runjian Communication
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By analyzing existing cross correlation between New China Life and Runjian Communication Co, you can compare the effects of market volatilities on New China and Runjian Communication 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 New China with a short position of Runjian Communication. Check out your portfolio center. Please also check ongoing floating volatility patterns of New China and Runjian Communication.
Diversification Opportunities for New China and Runjian Communication
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between New and Runjian is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding New China Life and Runjian Communication Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Runjian Communication and New 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 New China Life are associated (or correlated) with Runjian Communication. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Runjian Communication has no effect on the direction of New China i.e., New China and Runjian Communication go up and down completely randomly.
Pair Corralation between New China and Runjian Communication
Assuming the 90 days trading horizon New China Life is expected to under-perform the Runjian Communication. In addition to that, New China is 1.42 times more volatile than Runjian Communication Co. It trades about -0.08 of its total potential returns per unit of risk. Runjian Communication Co is currently generating about -0.02 per unit of volatility. If you would invest 3,063 in Runjian Communication Co on September 7, 2024 and sell it today you would lose (48.00) from holding Runjian Communication Co or give up 1.57% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Strong |
Accuracy | 100.0% |
Values | Daily Returns |
New China Life vs. Runjian Communication Co
Performance |
Timeline |
New China Life |
Runjian Communication |
New China and Runjian Communication Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with New China and Runjian Communication
The main advantage of trading using opposite New China and Runjian Communication positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if New China position performs unexpectedly, Runjian Communication 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 Runjian Communication will offset losses from the drop in Runjian Communication's long position.New China vs. Jiujiang Shanshui Technology | New China vs. Northking Information Technology | New China vs. Citic Guoan Wine | New China vs. Tonghua Grape Wine |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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