Correlation Between Zhejiang Construction and Chengdu Xinzhu
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By analyzing existing cross correlation between Zhejiang Construction Investment and Chengdu Xinzhu RoadBridge, you can compare the effects of market volatilities on Zhejiang Construction and Chengdu Xinzhu 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 Zhejiang Construction with a short position of Chengdu Xinzhu. Check out your portfolio center. Please also check ongoing floating volatility patterns of Zhejiang Construction and Chengdu Xinzhu.
Diversification Opportunities for Zhejiang Construction and Chengdu Xinzhu
-0.08 | Correlation Coefficient |
Good diversification
The 3 months correlation between Zhejiang and Chengdu is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Zhejiang Construction Investme and Chengdu Xinzhu RoadBridge in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chengdu Xinzhu RoadBridge and Zhejiang 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 Zhejiang Construction Investment are associated (or correlated) with Chengdu Xinzhu. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chengdu Xinzhu RoadBridge has no effect on the direction of Zhejiang Construction i.e., Zhejiang Construction and Chengdu Xinzhu go up and down completely randomly.
Pair Corralation between Zhejiang Construction and Chengdu Xinzhu
Assuming the 90 days trading horizon Zhejiang Construction Investment is expected to under-perform the Chengdu Xinzhu. But the stock apears to be less risky and, when comparing its historical volatility, Zhejiang Construction Investment is 2.75 times less risky than Chengdu Xinzhu. The stock trades about -0.14 of its potential returns per unit of risk. The Chengdu Xinzhu RoadBridge is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 493.00 in Chengdu Xinzhu RoadBridge on November 3, 2024 and sell it today you would earn a total of 37.00 from holding Chengdu Xinzhu RoadBridge or generate 7.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Zhejiang Construction Investme vs. Chengdu Xinzhu RoadBridge
Performance |
| Timeline |
| Zhejiang Construction |
| Chengdu Xinzhu RoadBridge |
Zhejiang Construction and Chengdu Xinzhu Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Zhejiang Construction and Chengdu Xinzhu
The main advantage of trading using opposite Zhejiang Construction and Chengdu Xinzhu positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Zhejiang Construction position performs unexpectedly, Chengdu Xinzhu 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 Chengdu Xinzhu will offset losses from the drop in Chengdu Xinzhu's long position.The idea behind Zhejiang Construction Investment and Chengdu Xinzhu RoadBridge 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.
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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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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