Correlation Between China Bills and Capital Securities
Can any of the company-specific risk be diversified away by investing in both China Bills and Capital Securities 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 Bills and Capital Securities into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between China Bills Finance and Capital Securities Corp, you can compare the effects of market volatilities on China Bills and Capital Securities 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 Bills with a short position of Capital Securities. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Bills and Capital Securities.
Diversification Opportunities for China Bills and Capital Securities
-0.12 | Correlation Coefficient |
Good diversification
The 3 months correlation between China and Capital is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding China Bills Finance and Capital Securities Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Capital Securities Corp and China Bills 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 Bills Finance are associated (or correlated) with Capital Securities. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Capital Securities Corp has no effect on the direction of China Bills i.e., China Bills and Capital Securities go up and down completely randomly.
Pair Corralation between China Bills and Capital Securities
Assuming the 90 days trading horizon China Bills is expected to generate 9.78 times less return on investment than Capital Securities. But when comparing it to its historical volatility, China Bills Finance is 4.13 times less risky than Capital Securities. It trades about 0.1 of its potential returns per unit of risk. Capital Securities Corp is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest 2,215 in Capital Securities Corp on September 4, 2024 and sell it today you would earn a total of 155.00 from holding Capital Securities Corp or generate 7.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
China Bills Finance vs. Capital Securities Corp
Performance |
| Timeline |
| China Bills Finance |
| Capital Securities Corp |
China Bills and Capital Securities Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Bills and Capital Securities
The main advantage of trading using opposite China Bills and Capital Securities positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Bills position performs unexpectedly, Capital Securities 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 Capital Securities will offset losses from the drop in Capital Securities' long position.The idea behind China Bills Finance and Capital Securities Corp 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.| Capital Securities vs. President Securities Corp | Capital Securities vs. Yuanta Financial Holdings | Capital Securities vs. Shin Kong Financial | Capital Securities vs. Taishin 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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
Other Complementary Tools
| Efficient Frontier Plot and analyze your portfolio and positions against risk-return landscape of the market. | |
| Portfolio Rebalancing Analyze risk-adjusted returns against different time horizons to find asset-allocation targets | |
| Portfolio Anywhere Track or share privately all of your investments from the convenience of any device | |
| FinTech Suite Use AI to screen and filter profitable investment opportunities | |
| Idea Optimizer Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio |