Correlation Between China Railway and Big Yellow
Can any of the company-specific risk be diversified away by investing in both China Railway and Big Yellow 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 Railway and Big Yellow into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between China Railway Construction and Big Yellow Group, you can compare the effects of market volatilities on China Railway and Big Yellow 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 Railway with a short position of Big Yellow. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Railway and Big Yellow.
Diversification Opportunities for China Railway and Big Yellow
-0.82 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between China and Big is -0.82. Overlapping area represents the amount of risk that can be diversified away by holding China Railway Construction and Big Yellow Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Big Yellow Group and China Railway 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 Railway Construction are associated (or correlated) with Big Yellow. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Big Yellow Group has no effect on the direction of China Railway i.e., China Railway and Big Yellow go up and down completely randomly.
Pair Corralation between China Railway and Big Yellow
Assuming the 90 days horizon China Railway Construction is expected to generate 2.3 times more return on investment than Big Yellow. However, China Railway is 2.3 times more volatile than Big Yellow Group. It trades about 0.02 of its potential returns per unit of risk. Big Yellow Group is currently generating about -0.14 per unit of risk. If you would invest 64.00 in China Railway Construction on August 31, 2024 and sell it today you would earn a total of 0.00 from holding China Railway Construction or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
China Railway Construction vs. Big Yellow Group
Performance |
| Timeline |
| China Railway Constr |
| Big Yellow Group |
China Railway and Big Yellow Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Railway and Big Yellow
The main advantage of trading using opposite China Railway and Big Yellow positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Railway position performs unexpectedly, Big Yellow 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 Big Yellow will offset losses from the drop in Big Yellow's long position.| China Railway vs. CPU SOFTWAREHOUSE | China Railway vs. Magic Software Enterprises | China Railway vs. Japan Medical Dynamic | China Railway vs. Compugroup Medical SE |
| Big Yellow vs. Sims Metal Management | Big Yellow vs. Playa Hotels Resorts | Big Yellow vs. Coor Service Management | Big Yellow vs. Perdoceo Education |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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