Correlation Between China Building and Anhui Huaheng
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By analyzing existing cross correlation between China Building Material and Anhui Huaheng Biotechnology, you can compare the effects of market volatilities on China Building and Anhui Huaheng 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 Anhui Huaheng. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Building and Anhui Huaheng.
Diversification Opportunities for China Building and Anhui Huaheng
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between China and Anhui is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding China Building Material and Anhui Huaheng Biotechnology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Anhui Huaheng Biotec 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 Anhui Huaheng. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Anhui Huaheng Biotec has no effect on the direction of China Building i.e., China Building and Anhui Huaheng go up and down completely randomly.
Pair Corralation between China Building and Anhui Huaheng
Assuming the 90 days trading horizon China Building Material is expected to under-perform the Anhui Huaheng. In addition to that, China Building is 1.68 times more volatile than Anhui Huaheng Biotechnology. It trades about -0.08 of its total potential returns per unit of risk. Anhui Huaheng Biotechnology is currently generating about -0.05 per unit of volatility. If you would invest 7,652 in Anhui Huaheng Biotechnology on November 9, 2024 and sell it today you would lose (4,880) from holding Anhui Huaheng Biotechnology or give up 63.77% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 18.53% |
| Values | Daily Returns |
China Building Material vs. Anhui Huaheng Biotechnology
Performance |
| Timeline |
| China Building Material |
Risk-Adjusted Performance
Excellent
Weak | Strong |
| Anhui Huaheng Biotec |
Risk-Adjusted Performance
Very Weak
Weak | Strong |
China Building and Anhui Huaheng Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Building and Anhui Huaheng
The main advantage of trading using opposite China Building and Anhui Huaheng positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Building position performs unexpectedly, Anhui Huaheng 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 Anhui Huaheng will offset losses from the drop in Anhui Huaheng's long position.The idea behind China Building Material and Anhui Huaheng Biotechnology 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.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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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