Correlation Between China Railway and China Shenhua
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By analyzing existing cross correlation between China Railway Group and China Shenhua Energy, you can compare the effects of market volatilities on China Railway and China Shenhua 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 Shenhua. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Railway and China Shenhua.
Diversification Opportunities for China Railway and China Shenhua
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between China and China is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding China Railway Group and China Shenhua Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Shenhua Energy 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 China Shenhua. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Shenhua Energy has no effect on the direction of China Railway i.e., China Railway and China Shenhua go up and down completely randomly.
Pair Corralation between China Railway and China Shenhua
Assuming the 90 days trading horizon China Railway Group is expected to generate 0.96 times more return on investment than China Shenhua. However, China Railway Group is 1.04 times less risky than China Shenhua. It trades about 0.05 of its potential returns per unit of risk. China Shenhua Energy is currently generating about -0.64 per unit of risk. If you would invest 592.00 in China Railway Group on November 27, 2024 and sell it today you would earn a total of 4.00 from holding China Railway Group or generate 0.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
China Railway Group vs. China Shenhua Energy
Performance |
| Timeline |
| China Railway Group |
| China Shenhua Energy |
China Railway and China Shenhua Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Railway and China Shenhua
The main advantage of trading using opposite China Railway and China Shenhua positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Railway position performs unexpectedly, China Shenhua 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 Shenhua will offset losses from the drop in China Shenhua's long position.| China Railway vs. Shenwu Energy Saving | China Railway vs. Bank of Suzhou | China Railway vs. Suzhou Weizhixiang Food | China Railway vs. Zhongjing Food Co |
| China Shenhua vs. Haima Automobile Group | China Shenhua vs. CIMC Vehicles Co | China Shenhua vs. Changchun Engley Automobile | China Shenhua vs. Zhejiang Qianjiang Motorcycle |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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