Correlation Between China Railway and Dongnan Electronics
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By analyzing existing cross correlation between China Railway Group and Dongnan Electronics Co, you can compare the effects of market volatilities on China Railway and Dongnan Electronics 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 Dongnan Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Railway and Dongnan Electronics.
Diversification Opportunities for China Railway and Dongnan Electronics
0.49 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between China and Dongnan is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding China Railway Group and Dongnan Electronics Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dongnan Electronics 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 Dongnan Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dongnan Electronics has no effect on the direction of China Railway i.e., China Railway and Dongnan Electronics go up and down completely randomly.
Pair Corralation between China Railway and Dongnan Electronics
Assuming the 90 days trading horizon China Railway Group is expected to generate 0.43 times more return on investment than Dongnan Electronics. However, China Railway Group is 2.33 times less risky than Dongnan Electronics. It trades about -0.35 of its potential returns per unit of risk. Dongnan Electronics Co is currently generating about -0.28 per unit of risk. If you would invest 642.00 in China Railway Group on October 14, 2024 and sell it today you would lose (61.00) from holding China Railway Group or give up 9.5% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
China Railway Group vs. Dongnan Electronics Co
Performance |
| Timeline |
| China Railway Group |
| Dongnan Electronics |
China Railway and Dongnan Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Railway and Dongnan Electronics
The main advantage of trading using opposite China Railway and Dongnan Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Railway position performs unexpectedly, Dongnan Electronics 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 Dongnan Electronics will offset losses from the drop in Dongnan Electronics' long position.| China Railway vs. Hefei Metalforming Mach | China Railway vs. State Grid InformationCommunication | China Railway vs. ZYF Lopsking Aluminum | China Railway vs. Unisplendour Corp |
| Dongnan Electronics vs. China Petroleum Chemical | Dongnan Electronics vs. PetroChina Co Ltd | Dongnan Electronics vs. China State Construction | Dongnan Electronics 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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