Correlation Between China State and Dirui Industrial
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By analyzing existing cross correlation between China State Construction and Dirui Industrial Co, you can compare the effects of market volatilities on China State and Dirui Industrial 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 State with a short position of Dirui Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of China State and Dirui Industrial.
Diversification Opportunities for China State and Dirui Industrial
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between China and Dirui is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding China State Construction and Dirui Industrial Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dirui Industrial and China State 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 State Construction are associated (or correlated) with Dirui Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dirui Industrial has no effect on the direction of China State i.e., China State and Dirui Industrial go up and down completely randomly.
Pair Corralation between China State and Dirui Industrial
Assuming the 90 days trading horizon China State Construction is expected to generate 0.59 times more return on investment than Dirui Industrial. However, China State Construction is 1.7 times less risky than Dirui Industrial. It trades about 0.01 of its potential returns per unit of risk. Dirui Industrial Co is currently generating about -0.02 per unit of risk. If you would invest 569.00 in China State Construction on August 30, 2024 and sell it today you would earn a total of 27.00 from holding China State Construction or generate 4.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
China State Construction vs. Dirui Industrial Co
Performance |
| Timeline |
| China State Construction |
| Dirui Industrial |
China State and Dirui Industrial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China State and Dirui Industrial
The main advantage of trading using opposite China State and Dirui Industrial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China State position performs unexpectedly, Dirui Industrial 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 Dirui Industrial will offset losses from the drop in Dirui Industrial's long position.| China State vs. Shenyang Chemical Industry | China State vs. Lianhe Chemical Technology | China State vs. North Huajin Chemical | China State vs. Maoming Petro Chemical Shihua |
| Dirui Industrial vs. Industrial and Commercial | Dirui Industrial vs. China Construction Bank | Dirui Industrial vs. Agricultural Bank of | Dirui Industrial vs. Bank of China |
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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