Correlation Between China Railway and Guangzhou Restaurants
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By analyzing existing cross correlation between China Railway Group and Guangzhou Restaurants Group, you can compare the effects of market volatilities on China Railway and Guangzhou Restaurants 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 Guangzhou Restaurants. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Railway and Guangzhou Restaurants.
Diversification Opportunities for China Railway and Guangzhou Restaurants
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between China and Guangzhou is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding China Railway Group and Guangzhou Restaurants Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guangzhou Restaurants 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 Guangzhou Restaurants. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guangzhou Restaurants has no effect on the direction of China Railway i.e., China Railway and Guangzhou Restaurants go up and down completely randomly.
Pair Corralation between China Railway and Guangzhou Restaurants
Assuming the 90 days trading horizon China Railway Group is expected to under-perform the Guangzhou Restaurants. In addition to that, China Railway is 1.14 times more volatile than Guangzhou Restaurants Group. It trades about -0.03 of its total potential returns per unit of risk. Guangzhou Restaurants Group is currently generating about 0.07 per unit of volatility. If you would invest 1,613 in Guangzhou Restaurants Group on September 2, 2024 and sell it today you would earn a total of 40.00 from holding Guangzhou Restaurants Group or generate 2.48% 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. Guangzhou Restaurants Group
Performance |
| Timeline |
| China Railway Group |
| Guangzhou Restaurants |
China Railway and Guangzhou Restaurants Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Railway and Guangzhou Restaurants
The main advantage of trading using opposite China Railway and Guangzhou Restaurants positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Railway position performs unexpectedly, Guangzhou Restaurants 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 Guangzhou Restaurants will offset losses from the drop in Guangzhou Restaurants' long position.| China Railway vs. 159681 | China Railway vs. 159005 | China Railway vs. Loctek Ergonomic Technology | China Railway vs. 516220 |
| Guangzhou Restaurants vs. China State Construction | Guangzhou Restaurants vs. Poly Real Estate | Guangzhou Restaurants vs. China Vanke Co | Guangzhou Restaurants vs. China Merchants Shekou |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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