Correlation Between China Railway and Aecom Technology
Can any of the company-specific risk be diversified away by investing in both China Railway and Aecom Technology 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 China Railway and Aecom Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between China Railway Group and Aecom Technology, you can compare the effects of market volatilities on China Railway and Aecom Technology 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 Railway with a short position of Aecom Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Railway and Aecom Technology.
Diversification Opportunities for China Railway and Aecom Technology
0.48 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between China and Aecom is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding China Railway Group and Aecom Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aecom Technology and China Railway 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 Railway Group are associated (or correlated) with Aecom Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aecom Technology has no effect on the direction of China Railway i.e., China Railway and Aecom Technology go up and down completely randomly.
Pair Corralation between China Railway and Aecom Technology
Assuming the 90 days horizon China Railway is expected to generate 4.32 times less return on investment than Aecom Technology. In addition to that, China Railway is 2.79 times more volatile than Aecom Technology. It trades about 0.01 of its total potential returns per unit of risk. Aecom Technology is currently generating about 0.14 per unit of volatility. If you would invest 8,618 in Aecom Technology on September 12, 2024 and sell it today you would earn a total of 2,629 from holding Aecom Technology or generate 30.51% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 99.2% |
Values | Daily Returns |
China Railway Group vs. Aecom Technology
Performance |
Timeline |
China Railway Group |
Aecom Technology |
China Railway and Aecom Technology Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with China Railway and Aecom Technology
The main advantage of trading using opposite China Railway and Aecom Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Railway position performs unexpectedly, Aecom Technology 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 Aecom Technology will offset losses from the drop in Aecom Technology's long position.China Railway vs. Arcadis NV | China Railway vs. VINCI SA | China Railway vs. Skanska AB ser | China Railway vs. Digital Locations |
Aecom Technology vs. Quanta Services | Aecom Technology vs. KBR Inc | Aecom Technology vs. Fluor | Aecom Technology vs. Tetra Tech |
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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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