Correlation Between China Fortune and China State
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By analyzing existing cross correlation between China Fortune Land and China State Construction, you can compare the effects of market volatilities on China Fortune and China State 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 Fortune with a short position of China State. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Fortune and China State.
Diversification Opportunities for China Fortune and China State
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between China and China is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding China Fortune Land and China State Construction in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China State Construction and China Fortune 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 Fortune Land are associated (or correlated) with China State. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China State Construction has no effect on the direction of China Fortune i.e., China Fortune and China State go up and down completely randomly.
Pair Corralation between China Fortune and China State
Assuming the 90 days trading horizon China Fortune Land is expected to generate 3.99 times more return on investment than China State. However, China Fortune is 3.99 times more volatile than China State Construction. It trades about 0.31 of its potential returns per unit of risk. China State Construction is currently generating about -0.08 per unit of risk. If you would invest 171.00 in China Fortune Land on August 28, 2024 and sell it today you would earn a total of 102.00 from holding China Fortune Land or generate 59.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
China Fortune Land vs. China State Construction
Performance |
| Timeline |
| China Fortune Land |
| China State Construction |
China Fortune and China State Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Fortune and China State
The main advantage of trading using opposite China Fortune and China State positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Fortune position performs unexpectedly, China State 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 State will offset losses from the drop in China State's long position.| China Fortune vs. Shanghai Action Education | China Fortune vs. Changjiang Publishing Media | China Fortune vs. Zhejiang Publishing Media | China Fortune vs. Zoje Resources Investment |
| China State vs. Leaguer Shenzhen MicroElectronics | China State vs. Shanghai CEO Environmental | China State vs. Bomin Electronics Co | China State vs. Zhejiang Kingland Pipeline |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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