Correlation Between XCMG Construction and Guangdong Electric
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By analyzing existing cross correlation between XCMG Construction Machinery and Guangdong Electric Power, you can compare the effects of market volatilities on XCMG Construction and Guangdong Electric 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 XCMG Construction with a short position of Guangdong Electric. Check out your portfolio center. Please also check ongoing floating volatility patterns of XCMG Construction and Guangdong Electric.
Diversification Opportunities for XCMG Construction and Guangdong Electric
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between XCMG and Guangdong is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding XCMG Construction Machinery and Guangdong Electric Power in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guangdong Electric Power and XCMG 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 XCMG Construction Machinery are associated (or correlated) with Guangdong Electric. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guangdong Electric Power has no effect on the direction of XCMG Construction i.e., XCMG Construction and Guangdong Electric go up and down completely randomly.
Pair Corralation between XCMG Construction and Guangdong Electric
Assuming the 90 days trading horizon XCMG Construction Machinery is expected to generate 2.49 times more return on investment than Guangdong Electric. However, XCMG Construction is 2.49 times more volatile than Guangdong Electric Power. It trades about 0.05 of its potential returns per unit of risk. Guangdong Electric Power is currently generating about -0.04 per unit of risk. If you would invest 698.00 in XCMG Construction Machinery on September 27, 2024 and sell it today you would earn a total of 72.00 from holding XCMG Construction Machinery or generate 10.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
XCMG Construction Machinery vs. Guangdong Electric Power
Performance |
| Timeline |
| XCMG Construction |
| Guangdong Electric Power |
XCMG Construction and Guangdong Electric Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with XCMG Construction and Guangdong Electric
The main advantage of trading using opposite XCMG Construction and Guangdong Electric positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if XCMG Construction position performs unexpectedly, Guangdong Electric 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 Guangdong Electric will offset losses from the drop in Guangdong Electric's long position.| XCMG Construction vs. Industrial and Commercial | XCMG Construction vs. Agricultural Bank of | XCMG Construction vs. China Construction Bank | XCMG Construction vs. Bank of China |
| Guangdong Electric vs. Industrial and Commercial | Guangdong Electric vs. Agricultural Bank of | Guangdong Electric vs. China Construction Bank | Guangdong Electric 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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