Correlation Between China Construction and Shanghai Newtouch
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By analyzing existing cross correlation between China Construction Bank and Shanghai Newtouch Software, you can compare the effects of market volatilities on China Construction and Shanghai Newtouch 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 Shanghai Newtouch. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Construction and Shanghai Newtouch.
Diversification Opportunities for China Construction and Shanghai Newtouch
0.15 | Correlation Coefficient |
Average diversification
The 3 months correlation between China and Shanghai is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding China Construction Bank and Shanghai Newtouch Software in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shanghai Newtouch 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 Shanghai Newtouch. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shanghai Newtouch has no effect on the direction of China Construction i.e., China Construction and Shanghai Newtouch go up and down completely randomly.
Pair Corralation between China Construction and Shanghai Newtouch
Assuming the 90 days trading horizon China Construction is expected to generate 3.6 times less return on investment than Shanghai Newtouch. But when comparing it to its historical volatility, China Construction Bank is 3.12 times less risky than Shanghai Newtouch. It trades about 0.07 of its potential returns per unit of risk. Shanghai Newtouch Software is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 1,106 in Shanghai Newtouch Software on October 26, 2024 and sell it today you would earn a total of 398.00 from holding Shanghai Newtouch Software or generate 35.99% 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. Shanghai Newtouch Software
Performance |
| Timeline |
| China Construction Bank |
| Shanghai Newtouch |
China Construction and Shanghai Newtouch Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Construction and Shanghai Newtouch
The main advantage of trading using opposite China Construction and Shanghai Newtouch positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Construction position performs unexpectedly, Shanghai Newtouch 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 Shanghai Newtouch will offset losses from the drop in Shanghai Newtouch's long position.The idea behind China Construction Bank and Shanghai Newtouch Software pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
| Shanghai Newtouch vs. Industrial and Commercial | Shanghai Newtouch vs. Agricultural Bank of | Shanghai Newtouch vs. China Construction Bank | Shanghai Newtouch vs. Bank of China |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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