Correlation Between China Life and Aofu Environmental
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By analyzing existing cross correlation between China Life Insurance and Aofu Environmental Technology, you can compare the effects of market volatilities on China Life and Aofu Environmental 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 Aofu Environmental. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Life and Aofu Environmental.
Diversification Opportunities for China Life and Aofu Environmental
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between China and Aofu is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding China Life Insurance and Aofu Environmental Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aofu Environmental 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 Aofu Environmental. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aofu Environmental has no effect on the direction of China Life i.e., China Life and Aofu Environmental go up and down completely randomly.
Pair Corralation between China Life and Aofu Environmental
Assuming the 90 days trading horizon China Life Insurance is expected to under-perform the Aofu Environmental. In addition to that, China Life is 1.13 times more volatile than Aofu Environmental Technology. It trades about -0.01 of its total potential returns per unit of risk. Aofu Environmental Technology is currently generating about 0.12 per unit of volatility. If you would invest 1,088 in Aofu Environmental Technology on August 31, 2024 and sell it today you would earn a total of 76.00 from holding Aofu Environmental Technology or generate 6.99% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
China Life Insurance vs. Aofu Environmental Technology
Performance |
| Timeline |
| China Life Insurance |
| Aofu Environmental |
China Life and Aofu Environmental Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Life and Aofu Environmental
The main advantage of trading using opposite China Life and Aofu Environmental positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Life position performs unexpectedly, Aofu Environmental 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 Aofu Environmental will offset losses from the drop in Aofu Environmental'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 |
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 Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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