Correlation Between China Construction and China Reform
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By analyzing existing cross correlation between China Construction Bank and China Reform Health, you can compare the effects of market volatilities on China Construction and China Reform 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 Construction with a short position of China Reform. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Construction and China Reform.
Diversification Opportunities for China Construction and China Reform
0.46 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between China and China is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding China Construction Bank and China Reform Health in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Reform Health and China Construction 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 Construction Bank are associated (or correlated) with China Reform. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Reform Health has no effect on the direction of China Construction i.e., China Construction and China Reform go up and down completely randomly.
Pair Corralation between China Construction and China Reform
Assuming the 90 days trading horizon China Construction Bank is expected to generate 0.19 times more return on investment than China Reform. However, China Construction Bank is 5.4 times less risky than China Reform. It trades about -0.02 of its potential returns per unit of risk. China Reform Health is currently generating about -0.13 per unit of risk. If you would invest 801.00 in China Construction Bank on August 29, 2024 and sell it today you would lose (3.00) from holding China Construction Bank or give up 0.37% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
China Construction Bank vs. China Reform Health
Performance |
| Timeline |
| China Construction Bank |
| China Reform Health |
China Construction and China Reform Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Construction and China Reform
The main advantage of trading using opposite China Construction and China Reform positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Construction position performs unexpectedly, China Reform 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 Reform will offset losses from the drop in China Reform's long position.| China Construction vs. Xinjiang Tianrun Dairy | China Construction vs. HaiXin Foods Co | China Construction vs. Juewei Food Co | China Construction vs. Suzhou Douson Drilling |
| China Reform vs. Industrial and Commercial | China Reform vs. China Construction Bank | China Reform vs. Agricultural Bank of | China Reform 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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