Correlation Between China Construction and PharmaResources
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By analyzing existing cross correlation between China Construction Bank and PharmaResources Co Ltd, you can compare the effects of market volatilities on China Construction and PharmaResources 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 PharmaResources. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Construction and PharmaResources.
Diversification Opportunities for China Construction and PharmaResources
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between China and PharmaResources is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding China Construction Bank and PharmaResources Co Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PharmaResources 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 PharmaResources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PharmaResources has no effect on the direction of China Construction i.e., China Construction and PharmaResources go up and down completely randomly.
Pair Corralation between China Construction and PharmaResources
Assuming the 90 days trading horizon China Construction Bank is expected to generate 0.29 times more return on investment than PharmaResources. However, China Construction Bank is 3.44 times less risky than PharmaResources. It trades about 0.09 of its potential returns per unit of risk. PharmaResources Co Ltd is currently generating about 0.02 per unit of risk. If you would invest 525.00 in China Construction Bank on September 19, 2024 and sell it today you would earn a total of 324.00 from holding China Construction Bank or generate 61.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
China Construction Bank vs. PharmaResources Co Ltd
Performance |
| Timeline |
| China Construction Bank |
| PharmaResources |
China Construction and PharmaResources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Construction and PharmaResources
The main advantage of trading using opposite China Construction and PharmaResources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Construction position performs unexpectedly, PharmaResources 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 PharmaResources will offset losses from the drop in PharmaResources' long position.| China Construction vs. Jiangxi Hengda Hi Tech | China Construction vs. Strait Innovation Internet | China Construction vs. Railway Signal Communication | China Construction vs. Changjiang Publishing Media |
| PharmaResources vs. Industrial and Commercial | PharmaResources vs. China Construction Bank | PharmaResources vs. Bank of China | PharmaResources vs. Agricultural Bank of |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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