Correlation Between Heilongjiang Transport and China Railway
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By analyzing existing cross correlation between Heilongjiang Transport Development and China Railway Group, you can compare the effects of market volatilities on Heilongjiang Transport 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 Heilongjiang Transport with a short position of China Railway. Check out your portfolio center. Please also check ongoing floating volatility patterns of Heilongjiang Transport and China Railway.
Diversification Opportunities for Heilongjiang Transport and China Railway
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Heilongjiang and China is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Heilongjiang Transport Develop and China Railway Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Railway Group and Heilongjiang Transport 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 Heilongjiang Transport 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 Group has no effect on the direction of Heilongjiang Transport i.e., Heilongjiang Transport and China Railway go up and down completely randomly.
Pair Corralation between Heilongjiang Transport and China Railway
Assuming the 90 days trading horizon Heilongjiang Transport Development is expected to generate 1.48 times more return on investment than China Railway. However, Heilongjiang Transport is 1.48 times more volatile than China Railway Group. It trades about 0.05 of its potential returns per unit of risk. China Railway Group is currently generating about -0.11 per unit of risk. If you would invest 337.00 in Heilongjiang Transport Development on November 7, 2024 and sell it today you would earn a total of 3.00 from holding Heilongjiang Transport Development or generate 0.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Heilongjiang Transport Develop vs. China Railway Group
Performance |
| Timeline |
| Heilongjiang Transport |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| China Railway Group |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Heilongjiang Transport and China Railway Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Heilongjiang Transport and China Railway
The main advantage of trading using opposite Heilongjiang Transport and China Railway positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Heilongjiang Transport 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.The idea behind Heilongjiang Transport Development and China Railway Group pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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