Correlation Between China Construction and Beijing New
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By analyzing existing cross correlation between China Construction Bank and Beijing New Building, you can compare the effects of market volatilities on China Construction and Beijing New 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 Beijing New. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Construction and Beijing New.
Diversification Opportunities for China Construction and Beijing New
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between China and Beijing is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding China Construction Bank and Beijing New Building in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Beijing New Building 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 Beijing New. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Beijing New Building has no effect on the direction of China Construction i.e., China Construction and Beijing New go up and down completely randomly.
Pair Corralation between China Construction and Beijing New
Assuming the 90 days trading horizon China Construction Bank is expected to generate 0.61 times more return on investment than Beijing New. However, China Construction Bank is 1.65 times less risky than Beijing New. It trades about 0.04 of its potential returns per unit of risk. Beijing New Building is currently generating about -0.26 per unit of risk. If you would invest 793.00 in China Construction Bank on September 1, 2024 and sell it today you would earn a total of 5.00 from holding China Construction Bank or generate 0.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.65% |
| Values | Daily Returns |
China Construction Bank vs. Beijing New Building
Performance |
| Timeline |
| China Construction Bank |
| Beijing New Building |
China Construction and Beijing New Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Construction and Beijing New
The main advantage of trading using opposite China Construction and Beijing New positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Construction position performs unexpectedly, Beijing New 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 Beijing New will offset losses from the drop in Beijing New's long position.The idea behind China Construction Bank and Beijing New Building pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
| Beijing New vs. Industrial and Commercial | Beijing New vs. Agricultural Bank of | Beijing New vs. China Construction Bank | Beijing New 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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