Correlation Between China Building and Guangdong Transtek
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By analyzing existing cross correlation between China Building Material and Guangdong Transtek Medical, you can compare the effects of market volatilities on China Building and Guangdong Transtek 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 Building with a short position of Guangdong Transtek. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Building and Guangdong Transtek.
Diversification Opportunities for China Building and Guangdong Transtek
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between China and Guangdong is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding China Building Material and Guangdong Transtek Medical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guangdong Transtek and China Building 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 Building Material are associated (or correlated) with Guangdong Transtek. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guangdong Transtek has no effect on the direction of China Building i.e., China Building and Guangdong Transtek go up and down completely randomly.
Pair Corralation between China Building and Guangdong Transtek
Assuming the 90 days trading horizon China Building Material is expected to under-perform the Guangdong Transtek. But the stock apears to be less risky and, when comparing its historical volatility, China Building Material is 1.73 times less risky than Guangdong Transtek. The stock trades about -0.04 of its potential returns per unit of risk. The Guangdong Transtek Medical is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 972.00 in Guangdong Transtek Medical on October 27, 2024 and sell it today you would earn a total of 329.00 from holding Guangdong Transtek Medical or generate 33.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
China Building Material vs. Guangdong Transtek Medical
Performance |
| Timeline |
| China Building Material |
| Guangdong Transtek |
China Building and Guangdong Transtek Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Building and Guangdong Transtek
The main advantage of trading using opposite China Building and Guangdong Transtek positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Building position performs unexpectedly, Guangdong Transtek 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 Guangdong Transtek will offset losses from the drop in Guangdong Transtek's long position.| China Building vs. Agricultural Bank of | China Building vs. Industrial and Commercial | China Building vs. Bank of China | China Building vs. PetroChina Co Ltd |
| Guangdong Transtek vs. Agricultural Bank of | Guangdong Transtek vs. Industrial and Commercial | Guangdong Transtek vs. Bank of China | Guangdong Transtek vs. China Construction Bank |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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