Correlation Between China World and China Railway
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By analyzing existing cross correlation between China World Trade and China Railway Construction, you can compare the effects of market volatilities on China World 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 China World with a short position of China Railway. Check out your portfolio center. Please also check ongoing floating volatility patterns of China World and China Railway.
Diversification Opportunities for China World and China Railway
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between China and China is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding China World Trade and China Railway Construction in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Railway Constr and China World 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 World Trade 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 Constr has no effect on the direction of China World i.e., China World and China Railway go up and down completely randomly.
Pair Corralation between China World and China Railway
Assuming the 90 days trading horizon China World is expected to generate 5.3 times less return on investment than China Railway. But when comparing it to its historical volatility, China World Trade is 1.32 times less risky than China Railway. It trades about 0.05 of its potential returns per unit of risk. China Railway Construction is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest 340.00 in China Railway Construction on September 2, 2024 and sell it today you would earn a total of 136.00 from holding China Railway Construction or generate 40.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
China World Trade vs. China Railway Construction
Performance |
| Timeline |
| China World Trade |
| China Railway Constr |
China World and China Railway Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China World and China Railway
The main advantage of trading using opposite China World and China Railway positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China World 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.| China World vs. Fiberhome Telecommunication Technologies | China World vs. Kingclean Electric Co | China World vs. Zhejiang Construction Investment | China World vs. Harbin Hatou Investment |
| China Railway vs. New China Life | China Railway vs. Ming Yang Smart | China Railway vs. 159681 | China Railway vs. 159005 |
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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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