Correlation Between China Construction and China Railway
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By analyzing existing cross correlation between China Construction Bank and China Railway Materials, you can compare the effects of market volatilities on China Construction and China Railway 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 Railway. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Construction and China Railway.
Diversification Opportunities for China Construction and China Railway
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between China and China is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding China Construction Bank and China Railway Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Railway Materials 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 Railway. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Railway Materials has no effect on the direction of China Construction i.e., China Construction and China Railway go up and down completely randomly.
Pair Corralation between China Construction and China Railway
Assuming the 90 days trading horizon China Construction Bank is expected to under-perform the China Railway. But the stock apears to be less risky and, when comparing its historical volatility, China Construction Bank is 2.02 times less risky than China Railway. The stock trades about -0.1 of its potential returns per unit of risk. The China Railway Materials is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 280.00 in China Railway Materials on September 4, 2024 and sell it today you would earn a total of 13.00 from holding China Railway Materials or generate 4.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
China Construction Bank vs. China Railway Materials
Performance |
| Timeline |
| China Construction Bank |
| China Railway Materials |
China Construction and China Railway Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Construction and China Railway
The main advantage of trading using opposite China Construction and China Railway positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Construction position performs unexpectedly, China Railway 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 Railway will offset losses from the drop in China Railway's long position.| China Construction vs. Henan Shuanghui Investment | China Construction vs. Servyou Software Group | China Construction vs. Hunan Investment Group | China Construction vs. Harbin Hatou Investment |
| China Railway vs. Industrial and Commercial | China Railway vs. China Construction Bank | China Railway vs. Agricultural Bank of | China Railway 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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