Correlation Between China State and China Fortune
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By analyzing existing cross correlation between China State Construction and China Fortune Land, you can compare the effects of market volatilities on China State and China Fortune 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 China Fortune. Check out your portfolio center. Please also check ongoing floating volatility patterns of China State and China Fortune.
Diversification Opportunities for China State and China Fortune
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between China and China is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding China State Construction and China Fortune Land in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Fortune Land 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 China Fortune. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Fortune Land has no effect on the direction of China State i.e., China State and China Fortune go up and down completely randomly.
Pair Corralation between China State and China Fortune
Assuming the 90 days trading horizon China State Construction is expected to under-perform the China Fortune. But the stock apears to be less risky and, when comparing its historical volatility, China State Construction is 3.99 times less risky than China Fortune. The stock trades about -0.08 of its potential returns per unit of risk. The China Fortune Land is currently generating about 0.31 of returns per unit of risk over similar time horizon. If you would invest 171.00 in China Fortune Land on August 28, 2024 and sell it today you would earn a total of 102.00 from holding China Fortune Land or generate 59.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
China State Construction vs. China Fortune Land
Performance |
| Timeline |
| China State Construction |
| China Fortune Land |
China State and China Fortune Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China State and China Fortune
The main advantage of trading using opposite China State and China Fortune positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China State position performs unexpectedly, China Fortune 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 Fortune will offset losses from the drop in China Fortune's long position.| China State vs. Leaguer Shenzhen MicroElectronics | China State vs. Shanghai CEO Environmental | China State vs. Bomin Electronics Co | China State vs. Zhejiang Kingland Pipeline |
| China Fortune vs. Shanghai Action Education | China Fortune vs. Changjiang Publishing Media | China Fortune vs. Zhejiang Publishing Media | China Fortune vs. Zoje Resources Investment |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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