Correlation Between China Construction and WuXi Xinje
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By analyzing existing cross correlation between China Construction Bank and WuXi Xinje Electric, you can compare the effects of market volatilities on China Construction and WuXi Xinje 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 WuXi Xinje. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Construction and WuXi Xinje.
Diversification Opportunities for China Construction and WuXi Xinje
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between China and WuXi is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding China Construction Bank and WuXi Xinje Electric in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WuXi Xinje Electric 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 WuXi Xinje. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WuXi Xinje Electric has no effect on the direction of China Construction i.e., China Construction and WuXi Xinje go up and down completely randomly.
Pair Corralation between China Construction and WuXi Xinje
Assuming the 90 days trading horizon China Construction is expected to generate 17.29 times less return on investment than WuXi Xinje. But when comparing it to its historical volatility, China Construction Bank is 2.31 times less risky than WuXi Xinje. It trades about 0.02 of its potential returns per unit of risk. WuXi Xinje Electric is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 3,468 in WuXi Xinje Electric on October 15, 2024 and sell it today you would earn a total of 740.00 from holding WuXi Xinje Electric or generate 21.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
China Construction Bank vs. WuXi Xinje Electric
Performance |
| Timeline |
| China Construction Bank |
| WuXi Xinje Electric |
China Construction and WuXi Xinje Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Construction and WuXi Xinje
The main advantage of trading using opposite China Construction and WuXi Xinje positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Construction position performs unexpectedly, WuXi Xinje 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 WuXi Xinje will offset losses from the drop in WuXi Xinje's long position.| China Construction vs. Jilin Chemical Fibre | China Construction vs. Liuzhou Chemical Industry | China Construction vs. Hainan Haiqi Transportation | China Construction vs. Longxing Chemical Stock |
| WuXi Xinje vs. Wuxi Chemical Equipment | WuXi Xinje vs. Guangzhou Haige Communications | WuXi Xinje vs. Shanghai Shibei Hi Tech | WuXi Xinje vs. Liuzhou Chemical Industry |
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 Directory module to find actively traded commodities issued by global exchanges.
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