Correlation Between China National and China Construction
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By analyzing existing cross correlation between China National Software and China Construction Bank, you can compare the effects of market volatilities on China National and China Construction 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 China Construction. Check out your portfolio center. Please also check ongoing floating volatility patterns of China National and China Construction.
Diversification Opportunities for China National and China Construction
0.32 | Correlation Coefficient |
Weak diversification
The 3 months correlation between China and China is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding China National Software and China Construction Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Construction Bank 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 China Construction. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Construction Bank has no effect on the direction of China National i.e., China National and China Construction go up and down completely randomly.
Pair Corralation between China National and China Construction
Assuming the 90 days trading horizon China National Software is expected to generate 3.34 times more return on investment than China Construction. However, China National is 3.34 times more volatile than China Construction Bank. It trades about 0.12 of its potential returns per unit of risk. China Construction Bank is currently generating about 0.0 per unit of risk. If you would invest 4,610 in China National Software on September 3, 2024 and sell it today you would earn a total of 936.00 from holding China National Software or generate 20.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
China National Software vs. China Construction Bank
Performance |
| Timeline |
| China National Software |
| China Construction Bank |
China National and China Construction Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China National and China Construction
The main advantage of trading using opposite China National and China Construction positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China National position performs unexpectedly, China Construction 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 Construction will offset losses from the drop in China Construction's long position.| China National vs. Shandong Hi Speed RoadBridge | China National vs. Huatian Hotel Group | China National vs. Jiangsu Broadcasting Cable | China National vs. Glodon Software Co |
| China Construction vs. DO Home Collection | China Construction vs. China National Software | China Construction vs. Guangdong Jingyi Metal | China Construction vs. Guocheng Mining Co |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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