Correlation Between China Construction and China Railway
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By analyzing existing cross correlation between China Construction Bank and China Railway Group, you can compare the effects of market volatilities on China Construction and China Railway 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 China Railway. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Construction and China Railway.
Diversification Opportunities for China Construction and China Railway
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between China and China is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding China Construction Bank and China Railway Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Railway Group 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 China Railway. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Railway Group has no effect on the direction of China Construction i.e., China Construction and China Railway go up and down completely randomly.
Pair Corralation between China Construction and China Railway
Assuming the 90 days trading horizon China Construction Bank is expected to generate 0.37 times more return on investment than China Railway. However, China Construction Bank is 2.71 times less risky than China Railway. It trades about -0.09 of its potential returns per unit of risk. China Railway Group is currently generating about -0.05 per unit of risk. If you would invest 801.00 in China Construction Bank on August 27, 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 | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
China Construction Bank vs. China Railway Group
Performance |
| Timeline |
| China Construction Bank |
| China Railway Group |
China Construction and China Railway Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Construction and China Railway
The main advantage of trading using opposite China Construction and China Railway positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Construction position performs unexpectedly, China Railway 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 China Railway will offset losses from the drop in China Railway's long position.| China Construction vs. Threes Company Media | China Construction vs. Omnijoi Media Corp | China Construction vs. Nanxing Furniture Machinery | China Construction vs. Qumei Furniture Group |
| China Railway vs. Hoshine Silicon Ind | China Railway vs. Glodon Software Co | China Railway vs. Tianjin Ruixin Technology | China Railway vs. Linewell Software Co |
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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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