Correlation Between China State and China National
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By analyzing existing cross correlation between China State Construction and China National Software, you can compare the effects of market volatilities on China State and China National 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 National. Check out your portfolio center. Please also check ongoing floating volatility patterns of China State and China National.
Diversification Opportunities for China State and China National
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between China and China is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding China State Construction and China National Software in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China National Software 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 National. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China National Software has no effect on the direction of China State i.e., China State and China National go up and down completely randomly.
Pair Corralation between China State and China National
Assuming the 90 days trading horizon China State Construction is expected to under-perform the China National. But the stock apears to be less risky and, when comparing its historical volatility, China State Construction is 2.86 times less risky than China National. The stock trades about -0.07 of its potential returns per unit of risk. The China National Software is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest 4,260 in China National Software on August 29, 2024 and sell it today you would earn a total of 960.00 from holding China National Software or generate 22.54% 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 National Software
Performance |
| Timeline |
| China State Construction |
| China National Software |
China State and China National Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China State and China National
The main advantage of trading using opposite China State and China National positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China State position performs unexpectedly, China National 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 National will offset losses from the drop in China National'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 |
| China National vs. China State Construction | China National vs. Huafa Industrial Co | China National vs. China International Capital | China National vs. Kweichow Moutai 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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