Correlation Between China Construction and Allied Machinery
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By analyzing existing cross correlation between China Construction Bank and Allied Machinery Co, you can compare the effects of market volatilities on China Construction and Allied Machinery 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 Allied Machinery. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Construction and Allied Machinery.
Diversification Opportunities for China Construction and Allied Machinery
0.03 | Correlation Coefficient |
Significant diversification
The 3 months correlation between China and Allied is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding China Construction Bank and Allied Machinery Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Allied Machinery 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 Allied Machinery. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Allied Machinery has no effect on the direction of China Construction i.e., China Construction and Allied Machinery go up and down completely randomly.
Pair Corralation between China Construction and Allied Machinery
Assuming the 90 days trading horizon China Construction is expected to generate 3.78 times less return on investment than Allied Machinery. But when comparing it to its historical volatility, China Construction Bank is 4.07 times less risky than Allied Machinery. It trades about 0.13 of its potential returns per unit of risk. Allied Machinery Co is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 1,819 in Allied Machinery Co on November 6, 2024 and sell it today you would earn a total of 172.00 from holding Allied Machinery Co or generate 9.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
China Construction Bank vs. Allied Machinery Co
Performance |
| Timeline |
| China Construction Bank |
| Allied Machinery |
China Construction and Allied Machinery Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Construction and Allied Machinery
The main advantage of trading using opposite China Construction and Allied Machinery positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Construction position performs unexpectedly, Allied Machinery 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 Allied Machinery will offset losses from the drop in Allied Machinery's long position.| China Construction vs. Nantong JiangTian Chemical | China Construction vs. Soyea Technology Co | China Construction vs. Hubei Forbon Technology | China Construction vs. Xilong Chemical Co |
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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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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