Correlation Between China Railway and Huadong Medicine
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By analyzing existing cross correlation between China Railway Group and Huadong Medicine Co, you can compare the effects of market volatilities on China Railway and Huadong Medicine 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 Huadong Medicine. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Railway and Huadong Medicine.
Diversification Opportunities for China Railway and Huadong Medicine
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between China and Huadong is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding China Railway Group and Huadong Medicine Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Huadong Medicine 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 Group are associated (or correlated) with Huadong Medicine. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Huadong Medicine has no effect on the direction of China Railway i.e., China Railway and Huadong Medicine go up and down completely randomly.
Pair Corralation between China Railway and Huadong Medicine
Assuming the 90 days trading horizon China Railway Group is expected to generate 0.98 times more return on investment than Huadong Medicine. However, China Railway Group is 1.02 times less risky than Huadong Medicine. It trades about 0.0 of its potential returns per unit of risk. Huadong Medicine Co is currently generating about -0.01 per unit of risk. If you would invest 676.00 in China Railway Group on September 26, 2024 and sell it today you would lose (26.00) from holding China Railway Group or give up 3.85% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 99.66% |
| Values | Daily Returns |
China Railway Group vs. Huadong Medicine Co
Performance |
| Timeline |
| China Railway Group |
| Huadong Medicine |
China Railway and Huadong Medicine Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Railway and Huadong Medicine
The main advantage of trading using opposite China Railway and Huadong Medicine positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Railway position performs unexpectedly, Huadong Medicine 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 Huadong Medicine will offset losses from the drop in Huadong Medicine's long position.| China Railway vs. Hainan Haiqi Transportation | China Railway vs. Guangdong Wens Foodstuff | China Railway vs. CSSC Offshore Marine | China Railway vs. Beijing Sanyuan Foods |
| Huadong Medicine vs. Industrial and Commercial | Huadong Medicine vs. Kweichow Moutai Co | Huadong Medicine vs. Agricultural Bank of | Huadong Medicine vs. China Mobile Limited |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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