Correlation Between Metro Investment and China Railway
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By analyzing existing cross correlation between Metro Investment Development and China Railway Construction, you can compare the effects of market volatilities on Metro Investment 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 Metro Investment with a short position of China Railway. Check out your portfolio center. Please also check ongoing floating volatility patterns of Metro Investment and China Railway.
Diversification Opportunities for Metro Investment and China Railway
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Metro and China is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Metro Investment Development 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 Metro Investment 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 Metro Investment Development 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 Metro Investment i.e., Metro Investment and China Railway go up and down completely randomly.
Pair Corralation between Metro Investment and China Railway
Assuming the 90 days trading horizon Metro Investment Development is expected to generate 2.19 times more return on investment than China Railway. However, Metro Investment is 2.19 times more volatile than China Railway Construction. It trades about -0.04 of its potential returns per unit of risk. China Railway Construction is currently generating about -0.28 per unit of risk. If you would invest 401.00 in Metro Investment Development on October 22, 2024 and sell it today you would lose (15.00) from holding Metro Investment Development or give up 3.74% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Metro Investment Development vs. China Railway Construction
Performance |
| Timeline |
| Metro Investment Dev |
| China Railway Constr |
Metro Investment and China Railway Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Metro Investment and China Railway
The main advantage of trading using opposite Metro Investment and China Railway positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Metro Investment 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.| Metro Investment vs. Nuode Investment Co | Metro Investment vs. Zhejiang Construction Investment | Metro Investment vs. Jointo Energy Investment | Metro Investment vs. Jiangsu Yueda Investment |
| China Railway vs. Guangdong Silvere Sci | China Railway vs. Shenyang Blue Silver | China Railway vs. Jinsanjiang Silicon Material | China Railway vs. Jinhui 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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