Correlation Between China Construction and CSPC Innovation
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By analyzing existing cross correlation between China Construction Bank and CSPC Innovation Pharmaceutical, you can compare the effects of market volatilities on China Construction and CSPC Innovation 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 CSPC Innovation. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Construction and CSPC Innovation.
Diversification Opportunities for China Construction and CSPC Innovation
-0.12 | Correlation Coefficient |
Good diversification
The 3 months correlation between China and CSPC is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding China Construction Bank and CSPC Innovation Pharmaceutical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CSPC Innovation Phar 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 CSPC Innovation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CSPC Innovation Phar has no effect on the direction of China Construction i.e., China Construction and CSPC Innovation go up and down completely randomly.
Pair Corralation between China Construction and CSPC Innovation
Assuming the 90 days trading horizon China Construction is expected to generate 14.37 times less return on investment than CSPC Innovation. But when comparing it to its historical volatility, China Construction Bank is 3.87 times less risky than CSPC Innovation. It trades about 0.08 of its potential returns per unit of risk. CSPC Innovation Pharmaceutical is currently generating about 0.31 of returns per unit of risk over similar time horizon. If you would invest 2,822 in CSPC Innovation Pharmaceutical on December 1, 2024 and sell it today you would earn a total of 694.00 from holding CSPC Innovation Pharmaceutical or generate 24.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
China Construction Bank vs. CSPC Innovation Pharmaceutical
Performance |
| Timeline |
| China Construction Bank |
| CSPC Innovation Phar |
China Construction and CSPC Innovation Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Construction and CSPC Innovation
The main advantage of trading using opposite China Construction and CSPC Innovation positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Construction position performs unexpectedly, CSPC Innovation 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 CSPC Innovation will offset losses from the drop in CSPC Innovation's long position.| China Construction vs. Hubei Huaqiang High Tech | China Construction vs. China Reform Health | China Construction vs. Eyebright Medical Technology | China Construction vs. Linktel Technologies Co |
| CSPC Innovation vs. Gan Yuan Foods | CSPC Innovation vs. Shanghai Ziyan Foods | CSPC Innovation vs. Great Sun Foods Co | CSPC Innovation vs. Suzhou Weizhixiang Food |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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