Correlation Between Industrial and China Railway
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By analyzing existing cross correlation between Industrial and Commercial and China Railway Group, you can compare the effects of market volatilities on Industrial and China Railway 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 Industrial with a short position of China Railway. Check out your portfolio center. Please also check ongoing floating volatility patterns of Industrial and China Railway.
Diversification Opportunities for Industrial and China Railway
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Industrial and China is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Industrial and Commercial and China Railway Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Railway Group and Industrial 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 Industrial and Commercial are associated (or correlated) with China Railway. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Railway Group has no effect on the direction of Industrial i.e., Industrial and China Railway go up and down completely randomly.
Pair Corralation between Industrial and China Railway
Assuming the 90 days trading horizon Industrial and Commercial is expected to generate 0.42 times more return on investment than China Railway. However, Industrial and Commercial is 2.4 times less risky than China Railway. It trades about -0.01 of its potential returns per unit of risk. China Railway Group is currently generating about -0.05 per unit of risk. If you would invest 607.00 in Industrial and Commercial on August 27, 2024 and sell it today you would lose (2.00) from holding Industrial and Commercial or give up 0.33% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Industrial and Commercial vs. China Railway Group
Performance |
| Timeline |
| Industrial and Commercial |
| China Railway Group |
Industrial and China Railway Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Industrial and China Railway
The main advantage of trading using opposite Industrial and China Railway positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Industrial position performs unexpectedly, China Railway 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 Railway will offset losses from the drop in China Railway's long position.| Industrial vs. MayAir Technology Co | Industrial vs. Hubei Yingtong Telecommunication | Industrial vs. Jilin Jlu Communication | Industrial vs. Eastern Communications Co |
| China Railway vs. Hoshine Silicon Ind | China Railway vs. Glodon Software Co | China Railway vs. Tianjin Ruixin Technology | China Railway vs. Linewell Software Co |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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