Correlation Between China National and Fujian Longzhou
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By analyzing existing cross correlation between China National Software and Fujian Longzhou Transportation, you can compare the effects of market volatilities on China National and Fujian Longzhou 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 National with a short position of Fujian Longzhou. Check out your portfolio center. Please also check ongoing floating volatility patterns of China National and Fujian Longzhou.
Diversification Opportunities for China National and Fujian Longzhou
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between China and Fujian is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding China National Software and Fujian Longzhou Transportation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fujian Longzhou Tran and China National 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 National Software are associated (or correlated) with Fujian Longzhou. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fujian Longzhou Tran has no effect on the direction of China National i.e., China National and Fujian Longzhou go up and down completely randomly.
Pair Corralation between China National and Fujian Longzhou
Assuming the 90 days trading horizon China National Software is expected to generate 0.66 times more return on investment than Fujian Longzhou. However, China National Software is 1.52 times less risky than Fujian Longzhou. It trades about -0.19 of its potential returns per unit of risk. Fujian Longzhou Transportation is currently generating about -0.15 per unit of risk. If you would invest 5,466 in China National Software on October 29, 2024 and sell it today you would lose (968.00) from holding China National Software or give up 17.71% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
China National Software vs. Fujian Longzhou Transportation
Performance |
| Timeline |
| China National Software |
| Fujian Longzhou Tran |
China National and Fujian Longzhou Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China National and Fujian Longzhou
The main advantage of trading using opposite China National and Fujian Longzhou positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China National position performs unexpectedly, Fujian Longzhou 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 Fujian Longzhou will offset losses from the drop in Fujian Longzhou's long position.| China National vs. Bank of China | China National vs. Kweichow Moutai Co | China National vs. PetroChina Co Ltd | China National vs. Bank of Communications |
| Fujian Longzhou vs. Weihai Honglin Electronic | Fujian Longzhou vs. Liaoning Dingjide Petrochemical | Fujian Longzhou vs. YiDong Electronics Technology | Fujian Longzhou vs. Guangdong Ellington Electronics |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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