Correlation Between China Construction and Impulse Qingdao
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By analyzing existing cross correlation between China Construction Bank and Impulse Qingdao Health, you can compare the effects of market volatilities on China Construction and Impulse Qingdao 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 Impulse Qingdao. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Construction and Impulse Qingdao.
Diversification Opportunities for China Construction and Impulse Qingdao
0.41 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between China and Impulse is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding China Construction Bank and Impulse Qingdao Health in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Impulse Qingdao 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 Impulse Qingdao. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Impulse Qingdao Health has no effect on the direction of China Construction i.e., China Construction and Impulse Qingdao go up and down completely randomly.
Pair Corralation between China Construction and Impulse Qingdao
Assuming the 90 days trading horizon China Construction is expected to generate 29.89 times less return on investment than Impulse Qingdao. But when comparing it to its historical volatility, China Construction Bank is 5.15 times less risky than Impulse Qingdao. It trades about 0.04 of its potential returns per unit of risk. Impulse Qingdao Health is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest 1,719 in Impulse Qingdao Health on September 1, 2024 and sell it today you would earn a total of 360.00 from holding Impulse Qingdao Health or generate 20.94% 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. Impulse Qingdao Health
Performance |
| Timeline |
| China Construction Bank |
| Impulse Qingdao Health |
China Construction and Impulse Qingdao Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Construction and Impulse Qingdao
The main advantage of trading using opposite China Construction and Impulse Qingdao positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Construction position performs unexpectedly, Impulse Qingdao 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 Impulse Qingdao will offset losses from the drop in Impulse Qingdao's long position.The idea behind China Construction Bank and Impulse Qingdao Health 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 Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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