Correlation Between China Life and Dalian Thermal
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By analyzing existing cross correlation between China Life Insurance and Dalian Thermal Power, you can compare the effects of market volatilities on China Life and Dalian Thermal 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 Dalian Thermal. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Life and Dalian Thermal.
Diversification Opportunities for China Life and Dalian Thermal
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between China and Dalian is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding China Life Insurance and Dalian Thermal Power in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dalian Thermal Power 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 Dalian Thermal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dalian Thermal Power has no effect on the direction of China Life i.e., China Life and Dalian Thermal go up and down completely randomly.
Pair Corralation between China Life and Dalian Thermal
Assuming the 90 days trading horizon China Life Insurance is expected to generate 0.55 times more return on investment than Dalian Thermal. However, China Life Insurance is 1.81 times less risky than Dalian Thermal. It trades about 0.11 of its potential returns per unit of risk. Dalian Thermal Power is currently generating about 0.01 per unit of risk. If you would invest 3,158 in China Life Insurance on August 31, 2024 and sell it today you would earn a total of 1,052 from holding China Life Insurance or generate 33.31% 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. Dalian Thermal Power
Performance |
| Timeline |
| China Life Insurance |
| Dalian Thermal Power |
China Life and Dalian Thermal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Life and Dalian Thermal
The main advantage of trading using opposite China Life and Dalian Thermal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Life position performs unexpectedly, Dalian Thermal 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 Dalian Thermal will offset losses from the drop in Dalian Thermal's long position.| China Life vs. XinJiang GuoTong Pipeline | China Life vs. Shandong Hongchuang Aluminum | China Life vs. Zhejiang Yongjin Metal | China Life vs. China National Software |
| Dalian Thermal vs. Industrial and Commercial | Dalian Thermal vs. Kweichow Moutai Co | Dalian Thermal vs. Agricultural Bank of | Dalian Thermal vs. China Mobile Limited |
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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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