Correlation Between China Longyuan and Zhejiang Construction
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By analyzing existing cross correlation between China Longyuan Power and Zhejiang Construction Investment, you can compare the effects of market volatilities on China Longyuan and Zhejiang 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 China Longyuan with a short position of Zhejiang Construction. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Longyuan and Zhejiang Construction.
Diversification Opportunities for China Longyuan and Zhejiang Construction
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between China and Zhejiang is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding China Longyuan Power and Zhejiang Construction Investme in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zhejiang Construction and China Longyuan 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 Longyuan Power are associated (or correlated) with Zhejiang Construction. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zhejiang Construction has no effect on the direction of China Longyuan i.e., China Longyuan and Zhejiang Construction go up and down completely randomly.
Pair Corralation between China Longyuan and Zhejiang Construction
Assuming the 90 days trading horizon China Longyuan Power is expected to under-perform the Zhejiang Construction. But the stock apears to be less risky and, when comparing its historical volatility, China Longyuan Power is 1.59 times less risky than Zhejiang Construction. The stock trades about -0.01 of its potential returns per unit of risk. The Zhejiang Construction Investment is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 1,009 in Zhejiang Construction Investment on September 14, 2024 and sell it today you would earn a total of 50.00 from holding Zhejiang Construction Investment or generate 4.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.58% |
| Values | Daily Returns |
China Longyuan Power vs. Zhejiang Construction Investme
Performance |
| Timeline |
| China Longyuan Power |
| Zhejiang Construction |
China Longyuan and Zhejiang Construction Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Longyuan and Zhejiang Construction
The main advantage of trading using opposite China Longyuan and Zhejiang Construction positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Longyuan position performs unexpectedly, Zhejiang 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 Zhejiang Construction will offset losses from the drop in Zhejiang Construction's long position.| China Longyuan vs. Zhejiang Construction Investment | China Longyuan vs. Zhuhai Comleader Information | China Longyuan vs. Westone Information Industry | China Longyuan vs. Jiugui Liquor Co |
| Zhejiang Construction vs. Sinomach General Machinery | Zhejiang Construction vs. Qijing Machinery | Zhejiang Construction vs. Hangzhou Pinming Software | Zhejiang Construction vs. Panda Financial Holding |
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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