Correlation Between ISoftStone Information and China Railway
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By analyzing existing cross correlation between iSoftStone Information Technology and China Railway Materials, you can compare the effects of market volatilities on ISoftStone Information and China Railway 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 ISoftStone Information with a short position of China Railway. Check out your portfolio center. Please also check ongoing floating volatility patterns of ISoftStone Information and China Railway.
Diversification Opportunities for ISoftStone Information and China Railway
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between ISoftStone and China is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding iSoftStone Information Technol and China Railway Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Railway Materials and ISoftStone Information 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 iSoftStone Information Technology are associated (or correlated) with China Railway. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Railway Materials has no effect on the direction of ISoftStone Information i.e., ISoftStone Information and China Railway go up and down completely randomly.
Pair Corralation between ISoftStone Information and China Railway
Assuming the 90 days trading horizon iSoftStone Information Technology is expected to under-perform the China Railway. In addition to that, ISoftStone Information is 2.17 times more volatile than China Railway Materials. It trades about -0.01 of its total potential returns per unit of risk. China Railway Materials is currently generating about 0.14 per unit of volatility. If you would invest 280.00 in China Railway Materials on September 5, 2024 and sell it today you would earn a total of 14.00 from holding China Railway Materials or generate 5.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
iSoftStone Information Technol vs. China Railway Materials
Performance |
| Timeline |
| iSoftStone Information |
| China Railway Materials |
ISoftStone Information and China Railway Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ISoftStone Information and China Railway
The main advantage of trading using opposite ISoftStone Information and China Railway positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ISoftStone Information position performs unexpectedly, China Railway 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 Railway will offset losses from the drop in China Railway's long position.The idea behind iSoftStone Information Technology and China Railway Materials 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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