Correlation Between China Railway and China Life
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By analyzing existing cross correlation between China Railway Construction and China Life Insurance, you can compare the effects of market volatilities on China Railway and China Life 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 China Life. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Railway and China Life.
Diversification Opportunities for China Railway and China Life
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between China and China is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding China Railway Construction and China Life Insurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Life Insurance 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 China Life. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Life Insurance has no effect on the direction of China Railway i.e., China Railway and China Life go up and down completely randomly.
Pair Corralation between China Railway and China Life
Assuming the 90 days trading horizon China Railway is expected to generate 3.97 times less return on investment than China Life. In addition to that, China Railway is 1.01 times more volatile than China Life Insurance. It trades about 0.02 of its total potential returns per unit of risk. China Life Insurance is currently generating about 0.1 per unit of volatility. If you would invest 3,194 in China Life Insurance on August 25, 2024 and sell it today you would earn a total of 983.00 from holding China Life Insurance or generate 30.78% 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. China Life Insurance
Performance |
| Timeline |
| China Railway Constr |
| China Life Insurance |
China Railway and China Life Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Railway and China Life
The main advantage of trading using opposite China Railway and China Life positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Railway position performs unexpectedly, China Life 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 Life will offset losses from the drop in China Life's long position.| China Railway vs. Jinhui Mining Co | China Railway vs. Keda Clean Energy | China Railway vs. Xinjiang Baodi Mining | China Railway vs. Shandong Longquan Pipeline |
| China Life vs. Ming Yang Smart | China Life vs. 159681 | China Life vs. 159005 | China Life vs. Loctek Ergonomic Technology |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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