Correlation Between Capital Securities and China Bills
Can any of the company-specific risk be diversified away by investing in both Capital Securities and China Bills at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Capital Securities and China Bills into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Capital Securities Corp and China Bills Finance, you can compare the effects of market volatilities on Capital Securities and China Bills 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 Capital Securities with a short position of China Bills. Check out your portfolio center. Please also check ongoing floating volatility patterns of Capital Securities and China Bills.
Diversification Opportunities for Capital Securities and China Bills
-0.12 | Correlation Coefficient |
Good diversification
The 3 months correlation between Capital and China is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Capital Securities Corp and China Bills Finance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Bills Finance and Capital Securities 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 Capital Securities Corp are associated (or correlated) with China Bills. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Bills Finance has no effect on the direction of Capital Securities i.e., Capital Securities and China Bills go up and down completely randomly.
Pair Corralation between Capital Securities and China Bills
Assuming the 90 days trading horizon Capital Securities Corp is expected to generate 4.13 times more return on investment than China Bills. However, Capital Securities is 4.13 times more volatile than China Bills Finance. It trades about 0.23 of its potential returns per unit of risk. China Bills Finance is currently generating about 0.1 per unit of risk. If you would invest 2,215 in Capital Securities Corp on September 4, 2024 and sell it today you would earn a total of 155.00 from holding Capital Securities Corp or generate 7.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Capital Securities Corp vs. China Bills Finance
Performance |
| Timeline |
| Capital Securities Corp |
| China Bills Finance |
Capital Securities and China Bills Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Capital Securities and China Bills
The main advantage of trading using opposite Capital Securities and China Bills positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Capital Securities position performs unexpectedly, China Bills 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 Bills will offset losses from the drop in China Bills' long position.| Capital Securities vs. President Securities Corp | Capital Securities vs. Yuanta Financial Holdings | Capital Securities vs. Shin Kong Financial | Capital Securities vs. Taishin Financial Holding |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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