Correlation Between China Construction and Uroica Mining
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By analyzing existing cross correlation between China Construction Bank and Uroica Mining Safety, you can compare the effects of market volatilities on China Construction and Uroica Mining 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 Uroica Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Construction and Uroica Mining.
Diversification Opportunities for China Construction and Uroica Mining
0.51 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between China and Uroica is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding China Construction Bank and Uroica Mining Safety in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Uroica Mining Safety 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 Uroica Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Uroica Mining Safety has no effect on the direction of China Construction i.e., China Construction and Uroica Mining go up and down completely randomly.
Pair Corralation between China Construction and Uroica Mining
Assuming the 90 days trading horizon China Construction is expected to generate 14.7 times less return on investment than Uroica Mining. But when comparing it to its historical volatility, China Construction Bank is 4.37 times less risky than Uroica Mining. It trades about 0.04 of its potential returns per unit of risk. Uroica Mining Safety is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 637.00 in Uroica Mining Safety on September 1, 2024 and sell it today you would earn a total of 59.00 from holding Uroica Mining Safety or generate 9.26% 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. Uroica Mining Safety
Performance |
| Timeline |
| China Construction Bank |
| Uroica Mining Safety |
China Construction and Uroica Mining Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Construction and Uroica Mining
The main advantage of trading using opposite China Construction and Uroica Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Construction position performs unexpectedly, Uroica Mining 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 Uroica Mining will offset losses from the drop in Uroica Mining's long position.The idea behind China Construction Bank and Uroica Mining Safety 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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