Correlation Between China Construction and New China
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By analyzing existing cross correlation between China Construction Bank and New China Life, you can compare the effects of market volatilities on China Construction and New China 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 New China. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Construction and New China.
Diversification Opportunities for China Construction and New China
0.48 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between China and New is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding China Construction Bank and New China Life in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on New China Life 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 New China. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of New China Life has no effect on the direction of China Construction i.e., China Construction and New China go up and down completely randomly.
Pair Corralation between China Construction and New China
Assuming the 90 days trading horizon China Construction Bank is expected to generate 0.23 times more return on investment than New China. However, China Construction Bank is 4.32 times less risky than New China. It trades about -0.09 of its potential returns per unit of risk. New China Life is currently generating about -0.05 per unit of risk. If you would invest 801.00 in China Construction Bank on August 28, 2024 and sell it today you would lose (13.00) from holding China Construction Bank or give up 1.62% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
China Construction Bank vs. New China Life
Performance |
| Timeline |
| China Construction Bank |
| New China Life |
China Construction and New China Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Construction and New China
The main advantage of trading using opposite China Construction and New China positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Construction position performs unexpectedly, New China 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 New China will offset losses from the drop in New China's long position.| China Construction vs. Zhongtong Guomai Communication | China Construction vs. China Satellite Communications | China Construction vs. SUNSEA Telecommunications Co | China Construction vs. Omnijoi Media Corp |
| New China vs. Shaanxi Meineng Clean | New China vs. Jiamei Food Packaging | New China vs. Yankershop Food Co | New China vs. AVCON Information Tech |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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