Correlation Between Guangdong Transtek and China Construction
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By analyzing existing cross correlation between Guangdong Transtek Medical and China Construction Bank, you can compare the effects of market volatilities on Guangdong Transtek and China Construction 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 Guangdong Transtek with a short position of China Construction. Check out your portfolio center. Please also check ongoing floating volatility patterns of Guangdong Transtek and China Construction.
Diversification Opportunities for Guangdong Transtek and China Construction
0.17 | Correlation Coefficient |
Average diversification
The 3 months correlation between Guangdong and China is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Guangdong Transtek Medical and China Construction Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Construction Bank and Guangdong Transtek 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 Guangdong Transtek Medical are associated (or correlated) with China Construction. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Construction Bank has no effect on the direction of Guangdong Transtek i.e., Guangdong Transtek and China Construction go up and down completely randomly.
Pair Corralation between Guangdong Transtek and China Construction
Assuming the 90 days trading horizon Guangdong Transtek Medical is expected to generate 3.1 times more return on investment than China Construction. However, Guangdong Transtek is 3.1 times more volatile than China Construction Bank. It trades about 0.03 of its potential returns per unit of risk. China Construction Bank is currently generating about 0.09 per unit of risk. If you would invest 1,016 in Guangdong Transtek Medical on November 7, 2024 and sell it today you would earn a total of 249.00 from holding Guangdong Transtek Medical or generate 24.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Guangdong Transtek Medical vs. China Construction Bank
Performance |
| Timeline |
| Guangdong Transtek |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| China Construction Bank |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
OK
Guangdong Transtek and China Construction Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Guangdong Transtek and China Construction
The main advantage of trading using opposite Guangdong Transtek and China Construction positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Guangdong Transtek position performs unexpectedly, China Construction 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 Construction will offset losses from the drop in China Construction's long position.The idea behind Guangdong Transtek Medical and China Construction Bank 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.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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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