Correlation Between China Railway and Hunan Investment
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By analyzing existing cross correlation between China Railway Construction and Hunan Investment Group, you can compare the effects of market volatilities on China Railway and Hunan Investment 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 Railway with a short position of Hunan Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Railway and Hunan Investment.
Diversification Opportunities for China Railway and Hunan Investment
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between China and Hunan is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding China Railway Construction and Hunan Investment Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hunan Investment and China Railway 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 Railway Construction are associated (or correlated) with Hunan Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hunan Investment has no effect on the direction of China Railway i.e., China Railway and Hunan Investment go up and down completely randomly.
Pair Corralation between China Railway and Hunan Investment
Assuming the 90 days trading horizon China Railway Construction is expected to under-perform the Hunan Investment. But the stock apears to be less risky and, when comparing its historical volatility, China Railway Construction is 2.82 times less risky than Hunan Investment. The stock trades about -0.05 of its potential returns per unit of risk. The Hunan Investment Group is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest 515.00 in Hunan Investment Group on September 15, 2024 and sell it today you would earn a total of 84.00 from holding Hunan Investment Group or generate 16.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
China Railway Construction vs. Hunan Investment Group
Performance |
| Timeline |
| China Railway Constr |
| Hunan Investment |
China Railway and Hunan Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Railway and Hunan Investment
The main advantage of trading using opposite China Railway and Hunan Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Railway position performs unexpectedly, Hunan Investment 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 Hunan Investment will offset losses from the drop in Hunan Investment's long position.| China Railway vs. North Huajin Chemical | China Railway vs. Maoming Petro Chemical Shihua | China Railway vs. Zhongzhu Medical Holdings | China Railway vs. Miracll Chemicals Co |
| Hunan Investment vs. ChengDu Hi Tech Development | Hunan Investment vs. Ping An Insurance | Hunan Investment vs. Gifore Agricultural Machinery | Hunan Investment vs. China Railway Construction |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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