Correlation Between China Fund and Penghua Shenzhen
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By analyzing existing cross correlation between China Fund Management and Penghua Shenzhen Energy, you can compare the effects of market volatilities on China Fund and Penghua Shenzhen 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 Fund with a short position of Penghua Shenzhen. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Fund and Penghua Shenzhen.
Diversification Opportunities for China Fund and Penghua Shenzhen
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between China and Penghua is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding China Fund Management and Penghua Shenzhen Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Penghua Shenzhen Energy and China Fund 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 Fund Management are associated (or correlated) with Penghua Shenzhen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Penghua Shenzhen Energy has no effect on the direction of China Fund i.e., China Fund and Penghua Shenzhen go up and down completely randomly.
Pair Corralation between China Fund and Penghua Shenzhen
Assuming the 90 days trading horizon China Fund is expected to generate 1.04 times less return on investment than Penghua Shenzhen. But when comparing it to its historical volatility, China Fund Management is 1.32 times less risky than Penghua Shenzhen. It trades about 0.1 of its potential returns per unit of risk. Penghua Shenzhen Energy is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 514.00 in Penghua Shenzhen Energy on August 25, 2024 and sell it today you would earn a total of 88.00 from holding Penghua Shenzhen Energy or generate 17.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
China Fund Management vs. Penghua Shenzhen Energy
Performance |
| Timeline |
| China Fund Management |
| Penghua Shenzhen Energy |
China Fund and Penghua Shenzhen Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Fund and Penghua Shenzhen
The main advantage of trading using opposite China Fund and Penghua Shenzhen positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Fund position performs unexpectedly, Penghua Shenzhen 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 Penghua Shenzhen will offset losses from the drop in Penghua Shenzhen's long position.| China Fund vs. Industrial and Commercial | China Fund vs. Kweichow Moutai Co | China Fund vs. Agricultural Bank of | China Fund vs. China Mobile Limited |
| Penghua Shenzhen vs. Industrial and Commercial | Penghua Shenzhen vs. Kweichow Moutai Co | Penghua Shenzhen vs. Agricultural Bank of | Penghua Shenzhen vs. China Mobile Limited |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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