Correlation Between Shanghai Broadband and China Construction
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By analyzing existing cross correlation between Shanghai Broadband Technology and China Construction Bank, you can compare the effects of market volatilities on Shanghai Broadband 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 Shanghai Broadband with a short position of China Construction. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shanghai Broadband and China Construction.
Diversification Opportunities for Shanghai Broadband and China Construction
-0.31 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Shanghai and China is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Shanghai Broadband Technology 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 Shanghai Broadband 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 Shanghai Broadband Technology 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 Shanghai Broadband i.e., Shanghai Broadband and China Construction go up and down completely randomly.
Pair Corralation between Shanghai Broadband and China Construction
Assuming the 90 days trading horizon Shanghai Broadband Technology is expected to under-perform the China Construction. In addition to that, Shanghai Broadband is 2.18 times more volatile than China Construction Bank. It trades about -0.01 of its total potential returns per unit of risk. China Construction Bank is currently generating about 0.08 per unit of volatility. If you would invest 664.00 in China Construction Bank on October 20, 2024 and sell it today you would earn a total of 170.00 from holding China Construction Bank or generate 25.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Shanghai Broadband Technology vs. China Construction Bank
Performance |
| Timeline |
| Shanghai Broadband |
| China Construction Bank |
Shanghai Broadband and China Construction Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shanghai Broadband and China Construction
The main advantage of trading using opposite Shanghai Broadband and China Construction positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shanghai Broadband 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.The idea behind Shanghai Broadband Technology and China Construction Bank pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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