Correlation Between Chongqing Road and Bank of Communications
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By analyzing existing cross correlation between Chongqing Road Bridge and Bank of Communications, you can compare the effects of market volatilities on Chongqing Road and Bank of Communications 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 Bank of Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chongqing Road and Bank of Communications.
Diversification Opportunities for Chongqing Road and Bank of Communications
0.11 | Correlation Coefficient |
Average diversification
The 3 months correlation between Chongqing and Bank is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Chongqing Road Bridge and Bank of Communications in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bank of Communications 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 Bank of Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bank of Communications has no effect on the direction of Chongqing Road i.e., Chongqing Road and Bank of Communications go up and down completely randomly.
Pair Corralation between Chongqing Road and Bank of Communications
Assuming the 90 days trading horizon Chongqing Road Bridge is expected to generate 2.35 times more return on investment than Bank of Communications. However, Chongqing Road is 2.35 times more volatile than Bank of Communications. It trades about 0.26 of its potential returns per unit of risk. Bank of Communications is currently generating about 0.07 per unit of risk. If you would invest 366.00 in Chongqing Road Bridge on September 3, 2024 and sell it today you would earn a total of 302.00 from holding Chongqing Road Bridge or generate 82.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Chongqing Road Bridge vs. Bank of Communications
Performance |
| Timeline |
| Chongqing Road Bridge |
| Bank of Communications |
Chongqing Road and Bank of Communications Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chongqing Road and Bank of Communications
The main advantage of trading using opposite Chongqing Road and Bank of Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chongqing Road position performs unexpectedly, Bank of Communications 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 Bank of Communications will offset losses from the drop in Bank of Communications' long position.| Chongqing Road vs. Jiahe Foods Industry | Chongqing Road vs. Xiwang Foodstuffs Co | Chongqing Road vs. Zhongshan Public Utilities | Chongqing Road vs. Jiajia Food Group |
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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