Correlation Between Longjian Road and China Construction
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By analyzing existing cross correlation between Longjian Road Bridge and China Construction Bank, you can compare the effects of market volatilities on Longjian Road 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 Longjian Road with a short position of China Construction. Check out your portfolio center. Please also check ongoing floating volatility patterns of Longjian Road and China Construction.
Diversification Opportunities for Longjian Road and China Construction
0.46 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Longjian and China is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Longjian Road Bridge 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 Longjian Road 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 Longjian Road Bridge 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 Longjian Road i.e., Longjian Road and China Construction go up and down completely randomly.
Pair Corralation between Longjian Road and China Construction
Assuming the 90 days trading horizon Longjian Road Bridge is expected to generate 2.09 times more return on investment than China Construction. However, Longjian Road is 2.09 times more volatile than China Construction Bank. It trades about 0.05 of its potential returns per unit of risk. China Construction Bank is currently generating about 0.04 per unit of risk. If you would invest 377.00 in Longjian Road Bridge on August 30, 2024 and sell it today you would earn a total of 6.00 from holding Longjian Road Bridge or generate 1.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Longjian Road Bridge vs. China Construction Bank
Performance |
| Timeline |
| Longjian Road Bridge |
| China Construction Bank |
Longjian Road and China Construction Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Longjian Road and China Construction
The main advantage of trading using opposite Longjian Road and China Construction positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Longjian Road 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.| Longjian Road vs. PetroChina Co Ltd | Longjian Road vs. China State Construction | Longjian Road vs. China Mobile Limited | Longjian Road vs. Industrial and Commercial |
| China Construction vs. Xinjiang Tianrun Dairy | China Construction vs. HaiXin Foods Co | China Construction vs. Juewei Food Co | China Construction vs. Suzhou Douson Drilling |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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