Correlation Between Liuzhou Chemical and China Railway
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By analyzing existing cross correlation between Liuzhou Chemical Industry and China Railway Construction, you can compare the effects of market volatilities on Liuzhou Chemical 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 Liuzhou Chemical with a short position of China Railway. Check out your portfolio center. Please also check ongoing floating volatility patterns of Liuzhou Chemical and China Railway.
Diversification Opportunities for Liuzhou Chemical and China Railway
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Liuzhou and China is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Liuzhou Chemical Industry 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 Liuzhou Chemical 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 Liuzhou Chemical Industry 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 Liuzhou Chemical i.e., Liuzhou Chemical and China Railway go up and down completely randomly.
Pair Corralation between Liuzhou Chemical and China Railway
Assuming the 90 days trading horizon Liuzhou Chemical Industry is expected to generate 2.06 times more return on investment than China Railway. However, Liuzhou Chemical is 2.06 times more volatile than China Railway Construction. It trades about -0.06 of its potential returns per unit of risk. China Railway Construction is currently generating about -0.19 per unit of risk. If you would invest 306.00 in Liuzhou Chemical Industry on September 29, 2024 and sell it today you would lose (13.00) from holding Liuzhou Chemical Industry or give up 4.25% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Liuzhou Chemical Industry vs. China Railway Construction
Performance |
| Timeline |
| Liuzhou Chemical Industry |
| China Railway Constr |
Liuzhou Chemical and China Railway Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Liuzhou Chemical and China Railway
The main advantage of trading using opposite Liuzhou Chemical and China Railway positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Liuzhou Chemical 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.| Liuzhou Chemical vs. Zijin Mining Group | Liuzhou Chemical vs. Wanhua Chemical Group | Liuzhou Chemical vs. Baoshan Iron Steel | Liuzhou Chemical vs. Shandong Gold Mining |
| China Railway vs. Bank of China | China Railway vs. Kweichow Moutai Co | China Railway vs. PetroChina Co Ltd | China Railway vs. Bank of Communications |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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