Correlation Between China Construction and Henan Lantian
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By analyzing existing cross correlation between China Construction Bank and Henan Lantian Gas, you can compare the effects of market volatilities on China Construction and Henan Lantian 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 Henan Lantian. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Construction and Henan Lantian.
Diversification Opportunities for China Construction and Henan Lantian
-0.34 | Correlation Coefficient |
Very good diversification
The 3 months correlation between China and Henan is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding China Construction Bank and Henan Lantian Gas in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Henan Lantian Gas 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 Henan Lantian. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Henan Lantian Gas has no effect on the direction of China Construction i.e., China Construction and Henan Lantian go up and down completely randomly.
Pair Corralation between China Construction and Henan Lantian
Assuming the 90 days trading horizon China Construction Bank is expected to generate 0.71 times more return on investment than Henan Lantian. However, China Construction Bank is 1.41 times less risky than Henan Lantian. It trades about 0.09 of its potential returns per unit of risk. Henan Lantian Gas is currently generating about 0.05 per unit of risk. If you would invest 592.00 in China Construction Bank on September 12, 2024 and sell it today you would earn a total of 245.00 from holding China Construction Bank or generate 41.39% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
China Construction Bank vs. Henan Lantian Gas
Performance |
| Timeline |
| China Construction Bank |
| Henan Lantian Gas |
China Construction and Henan Lantian Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Construction and Henan Lantian
The main advantage of trading using opposite China Construction and Henan Lantian positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Construction position performs unexpectedly, Henan Lantian 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 Henan Lantian will offset losses from the drop in Henan Lantian's long position.| China Construction vs. China Petroleum Chemical | China Construction vs. PetroChina Co Ltd | China Construction vs. China Mobile Limited | China Construction vs. Industrial and Commercial |
| Henan Lantian vs. Gansu Jiu Steel | Henan Lantian vs. Shandong Mining Machinery | Henan Lantian vs. Aba Chemicals Corp | Henan Lantian vs. BlueFocus Communication Group |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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