Correlation Between China Construction and Aofu Environmental
Specify exactly 2 symbols:
By analyzing existing cross correlation between China Construction Bank and Aofu Environmental Technology, you can compare the effects of market volatilities on China Construction and Aofu Environmental 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 Aofu Environmental. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Construction and Aofu Environmental.
Diversification Opportunities for China Construction and Aofu Environmental
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between China and Aofu is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding China Construction Bank and Aofu Environmental Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aofu Environmental 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 Aofu Environmental. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aofu Environmental has no effect on the direction of China Construction i.e., China Construction and Aofu Environmental go up and down completely randomly.
Pair Corralation between China Construction and Aofu Environmental
Assuming the 90 days trading horizon China Construction is expected to generate 2.61 times less return on investment than Aofu Environmental. But when comparing it to its historical volatility, China Construction Bank is 2.61 times less risky than Aofu Environmental. It trades about 0.14 of its potential returns per unit of risk. Aofu Environmental Technology is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 807.00 in Aofu Environmental Technology on September 25, 2024 and sell it today you would earn a total of 277.00 from holding Aofu Environmental Technology or generate 34.32% 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. Aofu Environmental Technology
Performance |
Timeline |
China Construction Bank |
Aofu Environmental |
China Construction and Aofu Environmental Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with China Construction and Aofu Environmental
The main advantage of trading using opposite China Construction and Aofu Environmental positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Construction position performs unexpectedly, Aofu Environmental 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 Aofu Environmental will offset losses from the drop in Aofu Environmental's long position.The idea behind China Construction Bank and Aofu Environmental Technology 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.
Aofu Environmental vs. China Construction Bank | Aofu Environmental vs. Southchip Semiconductor Technology | Aofu Environmental vs. StarPower Semiconductor | Aofu Environmental vs. GRG Banking Equipment |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
Other Complementary Tools
Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments | |
My Watchlist Analysis Analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like | |
Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk | |
Instant Ratings Determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
Insider Screener Find insiders across different sectors to evaluate their impact on performance |