Correlation Between China Construction and Chengdu Xinzhu
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By analyzing existing cross correlation between China Construction Bank and Chengdu Xinzhu RoadBridge, you can compare the effects of market volatilities on China Construction and Chengdu Xinzhu 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 China Construction with a short position of Chengdu Xinzhu. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Construction and Chengdu Xinzhu.
Diversification Opportunities for China Construction and Chengdu Xinzhu
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between China and Chengdu is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding China Construction Bank and Chengdu Xinzhu RoadBridge in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chengdu Xinzhu RoadBridge and China Construction 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 China Construction Bank are associated (or correlated) with Chengdu Xinzhu. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chengdu Xinzhu RoadBridge has no effect on the direction of China Construction i.e., China Construction and Chengdu Xinzhu go up and down completely randomly.
Pair Corralation between China Construction and Chengdu Xinzhu
Assuming the 90 days trading horizon China Construction is expected to generate 2.15 times less return on investment than Chengdu Xinzhu. But when comparing it to its historical volatility, China Construction Bank is 2.67 times less risky than Chengdu Xinzhu. It trades about 0.14 of its potential returns per unit of risk. Chengdu Xinzhu RoadBridge is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 414.00 in Chengdu Xinzhu RoadBridge on September 25, 2024 and sell it today you would earn a total of 109.00 from holding Chengdu Xinzhu RoadBridge or generate 26.33% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 98.33% |
Values | Daily Returns |
China Construction Bank vs. Chengdu Xinzhu RoadBridge
Performance |
Timeline |
China Construction Bank |
Chengdu Xinzhu RoadBridge |
China Construction and Chengdu Xinzhu Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with China Construction and Chengdu Xinzhu
The main advantage of trading using opposite China Construction and Chengdu Xinzhu positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Construction position performs unexpectedly, Chengdu Xinzhu 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 Chengdu Xinzhu will offset losses from the drop in Chengdu Xinzhu's long position.China Construction vs. Industrial and Commercial | China Construction vs. Kweichow Moutai Co | China Construction vs. Agricultural Bank of | China Construction vs. China Mobile Limited |
Chengdu Xinzhu vs. Industrial and Commercial | Chengdu Xinzhu vs. Agricultural Bank of | Chengdu Xinzhu vs. China Construction Bank | Chengdu Xinzhu vs. Bank of China |
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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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