Correlation Between China Life and China Railway
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By analyzing existing cross correlation between China Life Insurance and China Railway Construction, you can compare the effects of market volatilities on China Life 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 China Life with a short position of China Railway. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Life and China Railway.
Diversification Opportunities for China Life and China Railway
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between China and China is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding China Life Insurance 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 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 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 China Life i.e., China Life and China Railway go up and down completely randomly.
Pair Corralation between China Life and China Railway
Assuming the 90 days trading horizon China Life Insurance is expected to generate 0.99 times more return on investment than China Railway. However, China Life Insurance is 1.01 times less risky than China Railway. It trades about 0.1 of its potential returns per unit of risk. China Railway Construction is currently generating about 0.02 per unit of risk. If you would invest 3,194 in China Life Insurance on August 25, 2024 and sell it today you would earn a total of 983.00 from holding China Life Insurance or generate 30.78% 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. China Railway Construction
Performance |
| Timeline |
| China Life Insurance |
| China Railway Constr |
China Life and China Railway Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Life and China Railway
The main advantage of trading using opposite China Life and China Railway positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Life 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.| China Life vs. Ming Yang Smart | China Life vs. 159681 | China Life vs. 159005 | China Life vs. Loctek Ergonomic Technology |
| China Railway vs. Jinhui Mining Co | China Railway vs. Keda Clean Energy | China Railway vs. Xinjiang Baodi Mining | China Railway vs. Shandong Longquan Pipeline |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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