Correlation Between China Railway and Dirui Industrial
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By analyzing existing cross correlation between China Railway Construction and Dirui Industrial Co, you can compare the effects of market volatilities on China Railway and Dirui Industrial 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 Railway with a short position of Dirui Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Railway and Dirui Industrial.
Diversification Opportunities for China Railway and Dirui Industrial
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between China and Dirui is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding China Railway Construction and Dirui Industrial Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dirui Industrial and China Railway 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 Railway Construction are associated (or correlated) with Dirui Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dirui Industrial has no effect on the direction of China Railway i.e., China Railway and Dirui Industrial go up and down completely randomly.
Pair Corralation between China Railway and Dirui Industrial
Assuming the 90 days trading horizon China Railway Construction is expected to generate 0.71 times more return on investment than Dirui Industrial. However, China Railway Construction is 1.4 times less risky than Dirui Industrial. It trades about 0.02 of its potential returns per unit of risk. Dirui Industrial Co is currently generating about -0.02 per unit of risk. If you would invest 854.00 in China Railway Construction on August 30, 2024 and sell it today you would earn a total of 66.00 from holding China Railway Construction or generate 7.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
China Railway Construction vs. Dirui Industrial Co
Performance |
| Timeline |
| China Railway Constr |
| Dirui Industrial |
China Railway and Dirui Industrial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Railway and Dirui Industrial
The main advantage of trading using opposite China Railway and Dirui Industrial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Railway position performs unexpectedly, Dirui Industrial 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 Dirui Industrial will offset losses from the drop in Dirui Industrial's long position.| China Railway vs. Guangxi Wuzhou Communications | China Railway vs. UE Furniture Co | China Railway vs. Dr Peng Telecom | China Railway vs. Oppein Home Group |
| Dirui Industrial vs. Industrial and Commercial | Dirui Industrial vs. China Construction Bank | Dirui Industrial vs. Agricultural Bank of | Dirui Industrial vs. Bank of China |
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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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