Correlation Between Aofu Environmental and China Construction
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By analyzing existing cross correlation between Aofu Environmental Technology and China Construction Bank, you can compare the effects of market volatilities on Aofu Environmental and China Construction 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 Aofu Environmental with a short position of China Construction. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aofu Environmental and China Construction.
Diversification Opportunities for Aofu Environmental and China Construction
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Aofu and China is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Aofu Environmental Technology and China Construction Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Construction Bank and Aofu Environmental 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 Aofu Environmental Technology are associated (or correlated) with China Construction. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Construction Bank has no effect on the direction of Aofu Environmental i.e., Aofu Environmental and China Construction go up and down completely randomly.
Pair Corralation between Aofu Environmental and China Construction
Assuming the 90 days trading horizon Aofu Environmental Technology is expected to under-perform the China Construction. In addition to that, Aofu Environmental is 3.13 times more volatile than China Construction Bank. It trades about -0.01 of its total potential returns per unit of risk. China Construction Bank is currently generating about 0.16 per unit of volatility. If you would invest 811.00 in China Construction Bank on September 25, 2024 and sell it today you would earn a total of 51.00 from holding China Construction Bank or generate 6.29% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Aofu Environmental Technology vs. China Construction Bank
Performance |
Timeline |
Aofu Environmental |
China Construction Bank |
Aofu Environmental and China Construction Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Aofu Environmental and China Construction
The main advantage of trading using opposite Aofu Environmental and China Construction positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aofu Environmental position performs unexpectedly, China Construction 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 China Construction will offset losses from the drop in China Construction's long position.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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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