Correlation Between China Railway and Chengdu Bright
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By analyzing existing cross correlation between China Railway Construction and Chengdu Bright Eye, you can compare the effects of market volatilities on China Railway and Chengdu Bright 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 Chengdu Bright. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Railway and Chengdu Bright.
Diversification Opportunities for China Railway and Chengdu Bright
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between China and Chengdu is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding China Railway Construction and Chengdu Bright Eye in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chengdu Bright Eye 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 Chengdu Bright. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chengdu Bright Eye has no effect on the direction of China Railway i.e., China Railway and Chengdu Bright go up and down completely randomly.
Pair Corralation between China Railway and Chengdu Bright
Assuming the 90 days trading horizon China Railway is expected to generate 3.54 times less return on investment than Chengdu Bright. But when comparing it to its historical volatility, China Railway Construction is 1.96 times less risky than Chengdu Bright. It trades about 0.04 of its potential returns per unit of risk. Chengdu Bright Eye is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 4,217 in Chengdu Bright Eye on September 3, 2024 and sell it today you would earn a total of 1,495 from holding Chengdu Bright Eye or generate 35.45% 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. Chengdu Bright Eye
Performance |
| Timeline |
| China Railway Constr |
| Chengdu Bright Eye |
China Railway and Chengdu Bright Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Railway and Chengdu Bright
The main advantage of trading using opposite China Railway and Chengdu Bright positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Railway position performs unexpectedly, Chengdu Bright 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 Chengdu Bright will offset losses from the drop in Chengdu Bright's long position.| China Railway vs. Hainan Mining Co | China Railway vs. Hengli Industrial Development | China Railway vs. Guangzhou Tinci Materials | China Railway vs. Tibet Huayu Mining |
| Chengdu Bright vs. Hainan Haiqi Transportation | Chengdu Bright vs. Everdisplay Optronics Shanghai | Chengdu Bright vs. MayAir Technology Co | Chengdu Bright vs. Sportsoul Co Ltd |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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