Correlation Between China Construction and Feng Ching
Can any of the company-specific risk be diversified away by investing in both China Construction and Feng Ching at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining China Construction and Feng Ching into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between China Construction Bank and Feng Ching Metal, you can compare the effects of market volatilities on China Construction and Feng Ching 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 Construction with a short position of Feng Ching. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Construction and Feng Ching.
Diversification Opportunities for China Construction and Feng Ching
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between China and Feng is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding China Construction Bank and Feng Ching Metal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Feng Ching Metal and China 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 China Construction Bank are associated (or correlated) with Feng Ching. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Feng Ching Metal has no effect on the direction of China Construction i.e., China Construction and Feng Ching go up and down completely randomly.
Pair Corralation between China Construction and Feng Ching
Assuming the 90 days trading horizon China Construction Bank is expected to generate 0.29 times more return on investment than Feng Ching. However, China Construction Bank is 3.41 times less risky than Feng Ching. It trades about -0.02 of its potential returns per unit of risk. Feng Ching Metal is currently generating about -0.01 per unit of risk. If you would invest 1,428 in China Construction Bank on September 3, 2024 and sell it today you would lose (3.00) from holding China Construction Bank or give up 0.21% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
China Construction Bank vs. Feng Ching Metal
Performance |
| Timeline |
| China Construction Bank |
| Feng Ching Metal |
China Construction and Feng Ching Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Construction and Feng Ching
The main advantage of trading using opposite China Construction and Feng Ching positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Construction position performs unexpectedly, Feng Ching 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 Feng Ching will offset losses from the drop in Feng Ching's long position.| China Construction vs. Taiwan Semiconductor Manufacturing | China Construction vs. Hon Hai Precision | China Construction vs. MediaTek | China Construction vs. Chunghwa Telecom Co |
| Feng Ching vs. Eclat Textile Co | Feng Ching vs. WiseChip Semiconductor | Feng Ching vs. Novatek Microelectronics Corp | Feng Ching vs. Leader Electronics |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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