Correlation Between China Railway and Beijing Tongyizhong
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By analyzing existing cross correlation between China Railway Group and Beijing Tongyizhong New, you can compare the effects of market volatilities on China Railway and Beijing Tongyizhong 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 Beijing Tongyizhong. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Railway and Beijing Tongyizhong.
Diversification Opportunities for China Railway and Beijing Tongyizhong
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between China and Beijing is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding China Railway Group and Beijing Tongyizhong New in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Beijing Tongyizhong New 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 Beijing Tongyizhong. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Beijing Tongyizhong New has no effect on the direction of China Railway i.e., China Railway and Beijing Tongyizhong go up and down completely randomly.
Pair Corralation between China Railway and Beijing Tongyizhong
Assuming the 90 days trading horizon China Railway Group is expected to under-perform the Beijing Tongyizhong. But the stock apears to be less risky and, when comparing its historical volatility, China Railway Group is 1.28 times less risky than Beijing Tongyizhong. The stock trades about -0.02 of its potential returns per unit of risk. The Beijing Tongyizhong New is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 1,364 in Beijing Tongyizhong New on September 13, 2024 and sell it today you would earn a total of 59.00 from holding Beijing Tongyizhong New or generate 4.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.65% |
| Values | Daily Returns |
China Railway Group vs. Beijing Tongyizhong New
Performance |
| Timeline |
| China Railway Group |
| Beijing Tongyizhong New |
China Railway and Beijing Tongyizhong Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Railway and Beijing Tongyizhong
The main advantage of trading using opposite China Railway and Beijing Tongyizhong positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Railway position performs unexpectedly, Beijing Tongyizhong 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 Beijing Tongyizhong will offset losses from the drop in Beijing Tongyizhong's long position.| China Railway vs. Hangzhou Weiguang Electronic | China Railway vs. Fuzhou Rockchip Electronics | China Railway vs. YiDong Electronics Technology | China Railway vs. LianChuang Electronic Technology |
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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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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