Correlation Between China Construction and Dezhan HealthCare
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By analyzing existing cross correlation between China Construction Bank and Dezhan HealthCare Co, you can compare the effects of market volatilities on China Construction and Dezhan HealthCare 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 Dezhan HealthCare. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Construction and Dezhan HealthCare.
Diversification Opportunities for China Construction and Dezhan HealthCare
0.42 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between China and Dezhan is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding China Construction Bank and Dezhan HealthCare Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dezhan HealthCare 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 Dezhan HealthCare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dezhan HealthCare has no effect on the direction of China Construction i.e., China Construction and Dezhan HealthCare go up and down completely randomly.
Pair Corralation between China Construction and Dezhan HealthCare
Assuming the 90 days trading horizon China Construction Bank is expected to generate 0.49 times more return on investment than Dezhan HealthCare. However, China Construction Bank is 2.05 times less risky than Dezhan HealthCare. It trades about 0.08 of its potential returns per unit of risk. Dezhan HealthCare Co is currently generating about -0.01 per unit of risk. If you would invest 620.00 in China Construction Bank on September 1, 2024 and sell it today you would earn a total of 178.00 from holding China Construction Bank or generate 28.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
China Construction Bank vs. Dezhan HealthCare Co
Performance |
| Timeline |
| China Construction Bank |
| Dezhan HealthCare |
China Construction and Dezhan HealthCare Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Construction and Dezhan HealthCare
The main advantage of trading using opposite China Construction and Dezhan HealthCare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Construction position performs unexpectedly, Dezhan HealthCare 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 Dezhan HealthCare will offset losses from the drop in Dezhan HealthCare's long position.The idea behind China Construction Bank and Dezhan HealthCare Co 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.
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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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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