Correlation Between China Construction and China Railway
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By analyzing existing cross correlation between China Construction Bank and China Railway Construction, 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
0.52 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between China and China is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding China Construction Bank and China Railway Construction in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Railway Constr 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 Constr 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 is expected to generate 6.69 times less return on investment than China Railway. But when comparing it to its historical volatility, China Construction Bank is 2.35 times less risky than China Railway. It trades about 0.08 of its potential returns per unit of risk. China Railway Construction is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest 431.00 in China Railway Construction on August 31, 2024 and sell it today you would earn a total of 46.00 from holding China Railway Construction or generate 10.67% 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. China Railway Construction
Performance |
| Timeline |
| China Construction Bank |
| China Railway Constr |
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. Guangdong Jinming Machinery | China Construction vs. Postal Savings Bank | China Construction vs. Peoples Insurance of | China Construction vs. Allied Machinery Co |
| China Railway vs. China World Trade | China Railway vs. CSSC Offshore Marine | China Railway vs. Oriental Times Media | China Railway vs. China Publishing Media |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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