Correlation Between China Everbright and Fuda Alloy
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By analyzing existing cross correlation between China Everbright Bank and Fuda Alloy Materials, you can compare the effects of market volatilities on China Everbright and Fuda Alloy 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 Everbright with a short position of Fuda Alloy. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Everbright and Fuda Alloy.
Diversification Opportunities for China Everbright and Fuda Alloy
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between China and Fuda is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding China Everbright Bank and Fuda Alloy Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fuda Alloy Materials and China Everbright 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 Everbright Bank are associated (or correlated) with Fuda Alloy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fuda Alloy Materials has no effect on the direction of China Everbright i.e., China Everbright and Fuda Alloy go up and down completely randomly.
Pair Corralation between China Everbright and Fuda Alloy
Assuming the 90 days trading horizon China Everbright Bank is expected to generate 0.55 times more return on investment than Fuda Alloy. However, China Everbright Bank is 1.83 times less risky than Fuda Alloy. It trades about 0.12 of its potential returns per unit of risk. Fuda Alloy Materials is currently generating about -0.08 per unit of risk. If you would invest 342.00 in China Everbright Bank on August 27, 2024 and sell it today you would earn a total of 12.00 from holding China Everbright Bank or generate 3.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
China Everbright Bank vs. Fuda Alloy Materials
Performance |
| Timeline |
| China Everbright Bank |
| Fuda Alloy Materials |
China Everbright and Fuda Alloy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Everbright and Fuda Alloy
The main advantage of trading using opposite China Everbright and Fuda Alloy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Everbright position performs unexpectedly, Fuda Alloy 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 Fuda Alloy will offset losses from the drop in Fuda Alloy's long position.| China Everbright vs. Agricultural Bank of | China Everbright vs. Industrial and Commercial | China Everbright vs. Bank of China | China Everbright vs. China Construction Bank |
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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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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