Correlation Between China Railway and Digital China
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By analyzing existing cross correlation between China Railway Construction and Digital China Information, you can compare the effects of market volatilities on China Railway and Digital China 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 Digital China. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Railway and Digital China.
Diversification Opportunities for China Railway and Digital China
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between China and Digital is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding China Railway Construction and Digital China Information in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Digital China Information 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 Digital China. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Digital China Information has no effect on the direction of China Railway i.e., China Railway and Digital China go up and down completely randomly.
Pair Corralation between China Railway and Digital China
Assuming the 90 days trading horizon China Railway Construction is expected to generate 0.71 times more return on investment than Digital China. However, China Railway Construction is 1.41 times less risky than Digital China. It trades about 0.03 of its potential returns per unit of risk. Digital China Information is currently generating about 0.02 per unit of risk. If you would invest 402.00 in China Railway Construction on August 28, 2024 and sell it today you would earn a total of 75.00 from holding China Railway Construction or generate 18.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
China Railway Construction vs. Digital China Information
Performance |
| Timeline |
| China Railway Constr |
| Digital China Information |
China Railway and Digital China Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Railway and Digital China
The main advantage of trading using opposite China Railway and Digital China positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Railway position performs unexpectedly, Digital China 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 Digital China will offset losses from the drop in Digital China's long position.| China Railway vs. Biwin Storage Technology | China Railway vs. PetroChina Co Ltd | China Railway vs. Industrial and Commercial | China Railway vs. China Construction Bank |
| Digital China vs. Dhc Software Co | Digital China vs. China Sports Industry | Digital China vs. Allwin Telecommunication Co | Digital China vs. Changchun Faway Automobile |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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