Correlation Between China Construction and Hengdian Entertainment
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By analyzing existing cross correlation between China Construction Bank and Hengdian Entertainment Co, you can compare the effects of market volatilities on China Construction and Hengdian Entertainment 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 Hengdian Entertainment. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Construction and Hengdian Entertainment.
Diversification Opportunities for China Construction and Hengdian Entertainment
0.46 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between China and Hengdian is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding China Construction Bank and Hengdian Entertainment Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hengdian Entertainment 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 Hengdian Entertainment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hengdian Entertainment has no effect on the direction of China Construction i.e., China Construction and Hengdian Entertainment go up and down completely randomly.
Pair Corralation between China Construction and Hengdian Entertainment
Assuming the 90 days trading horizon China Construction Bank is expected to under-perform the Hengdian Entertainment. But the stock apears to be less risky and, when comparing its historical volatility, China Construction Bank is 4.59 times less risky than Hengdian Entertainment. The stock trades about -0.02 of its potential returns per unit of risk. The Hengdian Entertainment Co is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest 1,285 in Hengdian Entertainment Co on August 29, 2024 and sell it today you would earn a total of 210.00 from holding Hengdian Entertainment Co or generate 16.34% 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. Hengdian Entertainment Co
Performance |
| Timeline |
| China Construction Bank |
| Hengdian Entertainment |
China Construction and Hengdian Entertainment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Construction and Hengdian Entertainment
The main advantage of trading using opposite China Construction and Hengdian Entertainment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Construction position performs unexpectedly, Hengdian Entertainment 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 Hengdian Entertainment will offset losses from the drop in Hengdian Entertainment'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 |
| Hengdian Entertainment vs. Agricultural Bank of | Hengdian Entertainment vs. Industrial and Commercial | Hengdian Entertainment vs. Bank of China | Hengdian Entertainment vs. PetroChina Co Ltd |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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