Correlation Between Chongqing Changan and China Railway
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By analyzing existing cross correlation between Chongqing Changan Automobile and China Railway Construction, you can compare the effects of market volatilities on Chongqing Changan and China Railway 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 Chongqing Changan with a short position of China Railway. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chongqing Changan and China Railway.
Diversification Opportunities for Chongqing Changan and China Railway
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Chongqing and China is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Chongqing Changan Automobile and China Railway Construction in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Railway Constr and Chongqing Changan 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 Chongqing Changan Automobile are associated (or correlated) with China Railway. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Railway Constr has no effect on the direction of Chongqing Changan i.e., Chongqing Changan and China Railway go up and down completely randomly.
Pair Corralation between Chongqing Changan and China Railway
Assuming the 90 days trading horizon Chongqing Changan Automobile is expected to under-perform the China Railway. But the stock apears to be less risky and, when comparing its historical volatility, Chongqing Changan Automobile is 1.05 times less risky than China Railway. The stock trades about -0.52 of its potential returns per unit of risk. The China Railway Construction is currently generating about -0.34 of returns per unit of risk over similar time horizon. If you would invest 917.00 in China Railway Construction on October 14, 2024 and sell it today you would lose (80.00) from holding China Railway Construction or give up 8.72% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Chongqing Changan Automobile vs. China Railway Construction
Performance |
| Timeline |
| Chongqing Changan |
| China Railway Constr |
Chongqing Changan and China Railway Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chongqing Changan and China Railway
The main advantage of trading using opposite Chongqing Changan and China Railway positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chongqing Changan position performs unexpectedly, China Railway 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 Railway will offset losses from the drop in China Railway's long position.| Chongqing Changan vs. Hua Xia Bank | Chongqing Changan vs. Shaanxi Meineng Clean | Chongqing Changan vs. GRG Banking Equipment | Chongqing Changan vs. Sihui Fuji Electronics |
| China Railway vs. King Strong New Material | China Railway vs. Bloomage Biotechnology Corp | China Railway vs. Advanced Technology Materials | China Railway vs. Shanghai Rightongene Biotechnology |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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