Correlation Between China Railway and Eit Environmental
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By analyzing existing cross correlation between China Railway Group and Eit Environmental Development, you can compare the effects of market volatilities on China Railway and Eit Environmental 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 Eit Environmental. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Railway and Eit Environmental.
Diversification Opportunities for China Railway and Eit Environmental
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between China and Eit is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding China Railway Group and Eit Environmental Development in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eit Environmental 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 Eit Environmental. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eit Environmental has no effect on the direction of China Railway i.e., China Railway and Eit Environmental go up and down completely randomly.
Pair Corralation between China Railway and Eit Environmental
Assuming the 90 days trading horizon China Railway is expected to generate 3.86 times less return on investment than Eit Environmental. But when comparing it to its historical volatility, China Railway Group is 1.39 times less risky than Eit Environmental. It trades about 0.02 of its potential returns per unit of risk. Eit Environmental Development is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 1,292 in Eit Environmental Development on August 25, 2024 and sell it today you would earn a total of 265.00 from holding Eit Environmental Development or generate 20.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
China Railway Group vs. Eit Environmental Development
Performance |
| Timeline |
| China Railway Group |
| Eit Environmental |
China Railway and Eit Environmental Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Railway and Eit Environmental
The main advantage of trading using opposite China Railway and Eit Environmental positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Railway position performs unexpectedly, Eit Environmental 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 Eit Environmental will offset losses from the drop in Eit Environmental's long position.| China Railway vs. Winner Medical Co | China Railway vs. Hengkang Medical Group | China Railway vs. Lander Sports Development | China Railway vs. Shuhua Sports Co |
| Eit Environmental vs. China Petroleum Chemical | Eit Environmental vs. PetroChina Co Ltd | Eit Environmental vs. China State Construction | Eit Environmental vs. China Railway Group |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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