Correlation Between China Bills and Capital Futures
Can any of the company-specific risk be diversified away by investing in both China Bills and Capital Futures 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 Futures 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 Futures Corp, you can compare the effects of market volatilities on China Bills and Capital Futures 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 Futures. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Bills and Capital Futures.
Diversification Opportunities for China Bills and Capital Futures
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between China and Capital is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding China Bills Finance and Capital Futures Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Capital Futures 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 Futures. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Capital Futures Corp has no effect on the direction of China Bills i.e., China Bills and Capital Futures go up and down completely randomly.
Pair Corralation between China Bills and Capital Futures
Assuming the 90 days trading horizon China Bills Finance is expected to generate 0.41 times more return on investment than Capital Futures. However, China Bills Finance is 2.45 times less risky than Capital Futures. It trades about 0.27 of its potential returns per unit of risk. Capital Futures Corp is currently generating about 0.11 per unit of risk. If you would invest 1,500 in China Bills Finance on September 12, 2024 and sell it today you would earn a total of 40.00 from holding China Bills Finance or generate 2.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
China Bills Finance vs. Capital Futures Corp
Performance |
| Timeline |
| China Bills Finance |
| Capital Futures Corp |
China Bills and Capital Futures Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Bills and Capital Futures
The main advantage of trading using opposite China Bills and Capital Futures positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Bills position performs unexpectedly, Capital Futures 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 Futures will offset losses from the drop in Capital Futures' long position.| China Bills vs. Chang Hwa Commercial | China Bills vs. IBF Financial Holdings | China Bills vs. Taiwan Business Bank | China Bills vs. Yuanta Financial Holdings |
| Capital Futures vs. IBF Financial Holdings | Capital Futures vs. Capital Securities Corp | Capital Futures vs. President Securities Corp | Capital Futures vs. China Bills Finance |
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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