Correlation Between Industrial and China Railway
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By analyzing existing cross correlation between Industrial and Commercial and China Railway Construction, 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
0.36 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Industrial and China is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Industrial and Commercial and China Railway Construction in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Railway Constr 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 Constr 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 is expected to generate 3.47 times less return on investment than China Railway. But when comparing it to its historical volatility, Industrial and Commercial is 2.11 times less risky than China Railway. It trades about 0.15 of its potential returns per unit of risk. China Railway Construction is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest 431.00 in China Railway Construction on August 31, 2024 and sell it today you would earn a total of 46.00 from holding China Railway Construction or generate 10.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Industrial and Commercial vs. China Railway Construction
Performance |
| Timeline |
| Industrial and Commercial |
| China Railway Constr |
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. China Publishing Media | Industrial vs. Xiandai Investment Co | Industrial vs. Lander Sports Development | Industrial vs. Zhejiang Construction Investment |
| China Railway vs. China World Trade | China Railway vs. CSSC Offshore Marine | China Railway vs. Oriental Times Media | China Railway vs. China Publishing Media |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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