Correlation Between China Construction and Dalian Thermal
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By analyzing existing cross correlation between China Construction Bank and Dalian Thermal Power, you can compare the effects of market volatilities on China Construction and Dalian Thermal 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 Dalian Thermal. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Construction and Dalian Thermal.
Diversification Opportunities for China Construction and Dalian Thermal
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between China and Dalian is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding China Construction Bank and Dalian Thermal Power in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dalian Thermal Power 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 Dalian Thermal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dalian Thermal Power has no effect on the direction of China Construction i.e., China Construction and Dalian Thermal go up and down completely randomly.
Pair Corralation between China Construction and Dalian Thermal
Assuming the 90 days trading horizon China Construction is expected to generate 1.83 times less return on investment than Dalian Thermal. But when comparing it to its historical volatility, China Construction Bank is 3.04 times less risky than Dalian Thermal. It trades about 0.08 of its potential returns per unit of risk. Dalian Thermal Power is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 489.00 in Dalian Thermal Power on September 3, 2024 and sell it today you would earn a total of 301.00 from holding Dalian Thermal Power or generate 61.55% 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. Dalian Thermal Power
Performance |
| Timeline |
| China Construction Bank |
| Dalian Thermal Power |
China Construction and Dalian Thermal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Construction and Dalian Thermal
The main advantage of trading using opposite China Construction and Dalian Thermal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Construction position performs unexpectedly, Dalian Thermal 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 Dalian Thermal will offset losses from the drop in Dalian Thermal's long position.| China Construction vs. DO Home Collection | China Construction vs. China National Software | China Construction vs. Guangdong Jingyi Metal | China Construction vs. Guocheng Mining Co |
| Dalian Thermal vs. Industrial and Commercial | Dalian Thermal vs. Agricultural Bank of | Dalian Thermal vs. China Construction Bank | Dalian Thermal vs. Bank of China |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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