Correlation Between China Asset and Industrial
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By analyzing existing cross correlation between China Asset Management and Industrial and Commercial, you can compare the effects of market volatilities on China Asset and Industrial 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 Asset with a short position of Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Asset and Industrial.
Diversification Opportunities for China Asset and Industrial
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between China and Industrial is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding China Asset Management and Industrial and Commercial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Industrial and Commercial and China Asset 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 Asset Management are associated (or correlated) with Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Industrial and Commercial has no effect on the direction of China Asset i.e., China Asset and Industrial go up and down completely randomly.
Pair Corralation between China Asset and Industrial
Assuming the 90 days trading horizon China Asset Management is expected to generate 0.88 times more return on investment than Industrial. However, China Asset Management is 1.14 times less risky than Industrial. It trades about 0.36 of its potential returns per unit of risk. Industrial and Commercial is currently generating about 0.15 per unit of risk. If you would invest 370.00 in China Asset Management on November 7, 2024 and sell it today you would earn a total of 26.00 from holding China Asset Management or generate 7.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
China Asset Management vs. Industrial and Commercial
Performance |
| Timeline |
| China Asset Management |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Strong
| Industrial and Commercial |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Good
China Asset and Industrial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Asset and Industrial
The main advantage of trading using opposite China Asset and Industrial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Asset position performs unexpectedly, Industrial 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 Industrial will offset losses from the drop in Industrial's long position.The idea behind China Asset Management and Industrial and Commercial 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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