Correlation Between Chongqing Road and Zhejiang Construction
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By analyzing existing cross correlation between Chongqing Road Bridge and Zhejiang Construction Investment, you can compare the effects of market volatilities on Chongqing Road and Zhejiang Construction 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 Chongqing Road with a short position of Zhejiang Construction. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chongqing Road and Zhejiang Construction.
Diversification Opportunities for Chongqing Road and Zhejiang Construction
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Chongqing and Zhejiang is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Chongqing Road Bridge and Zhejiang Construction Investme in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zhejiang Construction and Chongqing Road 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 Chongqing Road Bridge are associated (or correlated) with Zhejiang Construction. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zhejiang Construction has no effect on the direction of Chongqing Road i.e., Chongqing Road and Zhejiang Construction go up and down completely randomly.
Pair Corralation between Chongqing Road and Zhejiang Construction
Assuming the 90 days trading horizon Chongqing Road Bridge is expected to generate 1.03 times more return on investment than Zhejiang Construction. However, Chongqing Road is 1.03 times more volatile than Zhejiang Construction Investment. It trades about 0.03 of its potential returns per unit of risk. Zhejiang Construction Investment is currently generating about -0.03 per unit of risk. If you would invest 474.00 in Chongqing Road Bridge on November 28, 2024 and sell it today you would earn a total of 130.00 from holding Chongqing Road Bridge or generate 27.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 99.78% |
| Values | Daily Returns |
Chongqing Road Bridge vs. Zhejiang Construction Investme
Performance |
| Timeline |
| Chongqing Road Bridge |
| Zhejiang Construction |
Chongqing Road and Zhejiang Construction Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chongqing Road and Zhejiang Construction
The main advantage of trading using opposite Chongqing Road and Zhejiang Construction positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chongqing Road position performs unexpectedly, Zhejiang Construction 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 Zhejiang Construction will offset losses from the drop in Zhejiang Construction's long position.| Chongqing Road vs. Lianhe Chemical Technology | Chongqing Road vs. Western Metal Materials | Chongqing Road vs. Tianjin Pengling Rubber | Chongqing Road vs. Liaoning Dingjide Petrochemical |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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