Correlation Between China Construction and Hangzhou Xili
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By analyzing existing cross correlation between China Construction Bank and Hangzhou Xili Intelligent, you can compare the effects of market volatilities on China Construction and Hangzhou Xili 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 Hangzhou Xili. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Construction and Hangzhou Xili.
Diversification Opportunities for China Construction and Hangzhou Xili
-0.46 | Correlation Coefficient |
Very good diversification
The 3 months correlation between China and Hangzhou is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding China Construction Bank and Hangzhou Xili Intelligent in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hangzhou Xili Intelligent 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 Hangzhou Xili. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hangzhou Xili Intelligent has no effect on the direction of China Construction i.e., China Construction and Hangzhou Xili go up and down completely randomly.
Pair Corralation between China Construction and Hangzhou Xili
Assuming the 90 days trading horizon China Construction Bank is expected to under-perform the Hangzhou Xili. But the stock apears to be less risky and, when comparing its historical volatility, China Construction Bank is 1.29 times less risky than Hangzhou Xili. The stock trades about -0.01 of its potential returns per unit of risk. The Hangzhou Xili Intelligent is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 1,020 in Hangzhou Xili Intelligent on November 2, 2024 and sell it today you would earn a total of 42.00 from holding Hangzhou Xili Intelligent or generate 4.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
China Construction Bank vs. Hangzhou Xili Intelligent
Performance |
| Timeline |
| China Construction Bank |
| Hangzhou Xili Intelligent |
China Construction and Hangzhou Xili Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Construction and Hangzhou Xili
The main advantage of trading using opposite China Construction and Hangzhou Xili positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Construction position performs unexpectedly, Hangzhou Xili 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 Hangzhou Xili will offset losses from the drop in Hangzhou Xili's long position.The idea behind China Construction Bank and Hangzhou Xili Intelligent 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.
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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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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