Correlation Between China Construction and Henzhen Zhaowei
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By analyzing existing cross correlation between China Construction Bank and Henzhen Zhaowei Machinery, you can compare the effects of market volatilities on China Construction and Henzhen Zhaowei 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 Henzhen Zhaowei. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Construction and Henzhen Zhaowei.
Diversification Opportunities for China Construction and Henzhen Zhaowei
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between China and Henzhen is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding China Construction Bank and Henzhen Zhaowei Machinery in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Henzhen Zhaowei Machinery 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 Henzhen Zhaowei. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Henzhen Zhaowei Machinery has no effect on the direction of China Construction i.e., China Construction and Henzhen Zhaowei go up and down completely randomly.
Pair Corralation between China Construction and Henzhen Zhaowei
Assuming the 90 days trading horizon China Construction is expected to generate 1.88 times less return on investment than Henzhen Zhaowei. But when comparing it to its historical volatility, China Construction Bank is 3.07 times less risky than Henzhen Zhaowei. It trades about 0.08 of its potential returns per unit of risk. Henzhen Zhaowei Machinery is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 5,875 in Henzhen Zhaowei Machinery on September 5, 2024 and sell it today you would earn a total of 1,959 from holding Henzhen Zhaowei Machinery or generate 33.34% 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. Henzhen Zhaowei Machinery
Performance |
| Timeline |
| China Construction Bank |
| Henzhen Zhaowei Machinery |
China Construction and Henzhen Zhaowei Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Construction and Henzhen Zhaowei
The main advantage of trading using opposite China Construction and Henzhen Zhaowei positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Construction position performs unexpectedly, Henzhen Zhaowei 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 Henzhen Zhaowei will offset losses from the drop in Henzhen Zhaowei's long position.| China Construction vs. Beijing Sanyuan Foods | China Construction vs. By health | China Construction vs. Everjoy Health Group | China Construction vs. Shandong Huifa Foodstuff |
| Henzhen Zhaowei vs. Biwin Storage Technology | Henzhen Zhaowei vs. PetroChina Co Ltd | Henzhen Zhaowei vs. Industrial and Commercial | Henzhen Zhaowei vs. China Construction Bank |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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