Correlation Between China Life and City Development
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By analyzing existing cross correlation between China Life Insurance and City Development Environment, you can compare the effects of market volatilities on China Life and City Development 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 Life with a short position of City Development. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Life and City Development.
Diversification Opportunities for China Life and City Development
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between China and City is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding China Life Insurance and City Development Environment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on City Development Env and China Life 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 Life Insurance are associated (or correlated) with City Development. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of City Development Env has no effect on the direction of China Life i.e., China Life and City Development go up and down completely randomly.
Pair Corralation between China Life and City Development
Assuming the 90 days trading horizon China Life Insurance is expected to generate 1.22 times more return on investment than City Development. However, China Life is 1.22 times more volatile than City Development Environment. It trades about 0.02 of its potential returns per unit of risk. City Development Environment is currently generating about 0.02 per unit of risk. If you would invest 4,188 in China Life Insurance on September 1, 2024 and sell it today you would earn a total of 22.00 from holding China Life Insurance or generate 0.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
China Life Insurance vs. City Development Environment
Performance |
| Timeline |
| China Life Insurance |
| City Development Env |
China Life and City Development Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Life and City Development
The main advantage of trading using opposite China Life and City Development positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Life position performs unexpectedly, City Development 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 City Development will offset losses from the drop in City Development's long position.| China Life vs. Industrial and Commercial | China Life vs. China Construction Bank | China Life vs. Bank of China | China Life vs. Agricultural Bank of |
| City Development vs. Jiangxi Naipu Mining | City Development vs. Sichuan Yahua Industrial | City Development vs. Guangdong Shenglu Telecommunication | City Development vs. Sichuan Jinshi Technology |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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