Correlation Between China Construction and Shandong Longquan
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By analyzing existing cross correlation between China Construction Bank and Shandong Longquan Pipeline, you can compare the effects of market volatilities on China Construction and Shandong Longquan 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 Shandong Longquan. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Construction and Shandong Longquan.
Diversification Opportunities for China Construction and Shandong Longquan
0.49 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between China and Shandong is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding China Construction Bank and Shandong Longquan Pipeline in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shandong Longquan 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 Shandong Longquan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shandong Longquan has no effect on the direction of China Construction i.e., China Construction and Shandong Longquan go up and down completely randomly.
Pair Corralation between China Construction and Shandong Longquan
Assuming the 90 days trading horizon China Construction is expected to generate 1.38 times less return on investment than Shandong Longquan. But when comparing it to its historical volatility, China Construction Bank is 1.72 times less risky than Shandong Longquan. It trades about 0.06 of its potential returns per unit of risk. Shandong Longquan Pipeline is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 413.00 in Shandong Longquan Pipeline on September 3, 2024 and sell it today you would earn a total of 63.00 from holding Shandong Longquan Pipeline or generate 15.25% 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. Shandong Longquan Pipeline
Performance |
| Timeline |
| China Construction Bank |
| Shandong Longquan |
China Construction and Shandong Longquan Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Construction and Shandong Longquan
The main advantage of trading using opposite China Construction and Shandong Longquan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Construction position performs unexpectedly, Shandong Longquan 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 Shandong Longquan will offset losses from the drop in Shandong Longquan's long position.| China Construction vs. DO Home Collection | China Construction vs. China National Software | China Construction vs. Guangdong Jingyi Metal | China Construction vs. Guocheng Mining Co |
| Shandong Longquan vs. Hunan Investment Group | Shandong Longquan vs. Xiandai Investment Co | Shandong Longquan vs. Ningbo Ligong Online | Shandong Longquan vs. Bank of Suzhou |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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