Correlation Between China Life and Shanghai Bailian
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By analyzing existing cross correlation between China Life Insurance and Shanghai Bailian Group, you can compare the effects of market volatilities on China Life and Shanghai Bailian 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 Shanghai Bailian. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Life and Shanghai Bailian.
Diversification Opportunities for China Life and Shanghai Bailian
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between China and Shanghai is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding China Life Insurance and Shanghai Bailian Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shanghai Bailian 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 Shanghai Bailian. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shanghai Bailian has no effect on the direction of China Life i.e., China Life and Shanghai Bailian go up and down completely randomly.
Pair Corralation between China Life and Shanghai Bailian
Assuming the 90 days trading horizon China Life Insurance is expected to under-perform the Shanghai Bailian. But the stock apears to be less risky and, when comparing its historical volatility, China Life Insurance is 1.06 times less risky than Shanghai Bailian. The stock trades about -0.02 of its potential returns per unit of risk. The Shanghai Bailian Group is currently generating about 0.34 of returns per unit of risk over similar time horizon. If you would invest 53.00 in Shanghai Bailian Group on August 30, 2024 and sell it today you would earn a total of 15.00 from holding Shanghai Bailian Group or generate 28.3% 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. Shanghai Bailian Group
Performance |
| Timeline |
| China Life Insurance |
| Shanghai Bailian |
China Life and Shanghai Bailian Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Life and Shanghai Bailian
The main advantage of trading using opposite China Life and Shanghai Bailian positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Life position performs unexpectedly, Shanghai Bailian 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 Shanghai Bailian will offset losses from the drop in Shanghai Bailian's long position.| China Life vs. Industrial and Commercial | China Life vs. Agricultural Bank of | China Life vs. China Construction Bank | China Life vs. Bank of China |
| Shanghai Bailian vs. Jinhe Biotechnology Co | Shanghai Bailian vs. Changchun BCHT Biotechnology | Shanghai Bailian vs. Bomesc Offshore Engineering | Shanghai Bailian vs. Healthcare Co |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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