Correlation Between City Development and China Life
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By analyzing existing cross correlation between City Development Environment and China Life Insurance, you can compare the effects of market volatilities on City Development and China Life 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 City Development with a short position of China Life. Check out your portfolio center. Please also check ongoing floating volatility patterns of City Development and China Life.
Diversification Opportunities for City Development and China Life
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between City and China is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding City Development Environment and China Life Insurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Life Insurance and City Development 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 City Development Environment are associated (or correlated) with China Life. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Life Insurance has no effect on the direction of City Development i.e., City Development and China Life go up and down completely randomly.
Pair Corralation between City Development and China Life
Assuming the 90 days trading horizon City Development is expected to generate 1.27 times less return on investment than China Life. But when comparing it to its historical volatility, City Development Environment is 1.22 times less risky than China Life. It trades about 0.02 of its potential returns per unit of risk. China Life Insurance is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 4,188 in China Life Insurance on September 1, 2024 and sell it today you would earn a total of 22.00 from holding China Life Insurance or generate 0.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
City Development Environment vs. China Life Insurance
Performance |
| Timeline |
| City Development Env |
| China Life Insurance |
City Development and China Life Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with City Development and China Life
The main advantage of trading using opposite City Development and China Life positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if City Development position performs unexpectedly, China Life 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 Life will offset losses from the drop in China Life's long position.| City Development vs. Jiangxi Naipu Mining | City Development vs. Sichuan Yahua Industrial | City Development vs. Guangdong Shenglu Telecommunication | City Development vs. Sichuan Jinshi Technology |
| China Life vs. Industrial and Commercial | China Life vs. China Construction Bank | China Life vs. Bank of China | China Life vs. Agricultural Bank of |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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