Correlation Between China Construction and Huafa Industrial
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By analyzing existing cross correlation between China Construction Bank and Huafa Industrial Co, you can compare the effects of market volatilities on China Construction and Huafa Industrial 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 Huafa Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Construction and Huafa Industrial.
Diversification Opportunities for China Construction and Huafa Industrial
0.57 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between China and Huafa is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding China Construction Bank and Huafa Industrial Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Huafa Industrial 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 Huafa Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Huafa Industrial has no effect on the direction of China Construction i.e., China Construction and Huafa Industrial go up and down completely randomly.
Pair Corralation between China Construction and Huafa Industrial
Assuming the 90 days trading horizon China Construction Bank is expected to generate 0.48 times more return on investment than Huafa Industrial. However, China Construction Bank is 2.09 times less risky than Huafa Industrial. It trades about 0.07 of its potential returns per unit of risk. Huafa Industrial Co is currently generating about -0.03 per unit of risk. If you would invest 629.00 in China Construction Bank on August 29, 2024 and sell it today you would earn a total of 177.00 from holding China Construction Bank or generate 28.14% 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. Huafa Industrial Co
Performance |
| Timeline |
| China Construction Bank |
| Huafa Industrial |
China Construction and Huafa Industrial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Construction and Huafa Industrial
The main advantage of trading using opposite China Construction and Huafa Industrial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Construction position performs unexpectedly, Huafa Industrial 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 Huafa Industrial will offset losses from the drop in Huafa Industrial's long position.| China Construction vs. Xinjiang Tianrun Dairy | China Construction vs. HaiXin Foods Co | China Construction vs. Juewei Food Co | China Construction vs. Suzhou Douson Drilling |
| Huafa Industrial vs. Cambricon Technologies Corp | Huafa Industrial vs. Empyrean Technology Co | Huafa Industrial vs. Kuang Chi Technologies | Huafa Industrial vs. Gansu Jiu Steel |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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