Correlation Between Hubeiyichang Transportation and China Railway
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By analyzing existing cross correlation between Hubeiyichang Transportation Group and China Railway Construction, you can compare the effects of market volatilities on Hubeiyichang Transportation 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 Hubeiyichang Transportation with a short position of China Railway. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hubeiyichang Transportation and China Railway.
Diversification Opportunities for Hubeiyichang Transportation and China Railway
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Hubeiyichang and China is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Hubeiyichang Transportation Gr 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 Hubeiyichang Transportation 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 Hubeiyichang Transportation Group 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 Hubeiyichang Transportation i.e., Hubeiyichang Transportation and China Railway go up and down completely randomly.
Pair Corralation between Hubeiyichang Transportation and China Railway
Assuming the 90 days trading horizon Hubeiyichang Transportation Group is expected to under-perform the China Railway. In addition to that, Hubeiyichang Transportation is 1.37 times more volatile than China Railway Construction. It trades about -0.18 of its total potential returns per unit of risk. China Railway Construction is currently generating about 0.08 per unit of volatility. If you would invest 408.00 in China Railway Construction on November 28, 2024 and sell it today you would earn a total of 5.00 from holding China Railway Construction or generate 1.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 94.12% |
| Values | Daily Returns |
Hubeiyichang Transportation Gr vs. China Railway Construction
Performance |
| Timeline |
| Hubeiyichang Transportation |
| China Railway Constr |
Hubeiyichang Transportation and China Railway Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hubeiyichang Transportation and China Railway
The main advantage of trading using opposite Hubeiyichang Transportation and China Railway positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hubeiyichang Transportation 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.The idea behind Hubeiyichang Transportation Group and China Railway Construction pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
| China Railway vs. Industrial and Commercial | China Railway vs. Agricultural Bank of | China Railway vs. China Construction Bank | China Railway 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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