Correlation Between China Railway and Liuzhou Chemical
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By analyzing existing cross correlation between China Railway Construction and Liuzhou Chemical Industry, you can compare the effects of market volatilities on China Railway and Liuzhou Chemical 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 Liuzhou Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Railway and Liuzhou Chemical.
Diversification Opportunities for China Railway and Liuzhou Chemical
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between China and Liuzhou is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding China Railway Construction and Liuzhou Chemical Industry in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Liuzhou Chemical Industry 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 Liuzhou Chemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Liuzhou Chemical Industry has no effect on the direction of China Railway i.e., China Railway and Liuzhou Chemical go up and down completely randomly.
Pair Corralation between China Railway and Liuzhou Chemical
Assuming the 90 days trading horizon China Railway Construction is expected to under-perform the Liuzhou Chemical. But the stock apears to be less risky and, when comparing its historical volatility, China Railway Construction is 2.06 times less risky than Liuzhou Chemical. The stock trades about -0.19 of its potential returns per unit of risk. The Liuzhou Chemical Industry is currently generating about -0.06 of returns per unit of risk over similar time horizon. If you would invest 306.00 in Liuzhou Chemical Industry on September 29, 2024 and sell it today you would lose (13.00) from holding Liuzhou Chemical Industry or give up 4.25% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
China Railway Construction vs. Liuzhou Chemical Industry
Performance |
| Timeline |
| China Railway Constr |
| Liuzhou Chemical Industry |
China Railway and Liuzhou Chemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Railway and Liuzhou Chemical
The main advantage of trading using opposite China Railway and Liuzhou Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Railway position performs unexpectedly, Liuzhou Chemical 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 Liuzhou Chemical will offset losses from the drop in Liuzhou Chemical's long position.| China Railway vs. Bank of China | China Railway vs. Kweichow Moutai Co | China Railway vs. PetroChina Co Ltd | China Railway vs. Bank of Communications |
| Liuzhou Chemical vs. Zijin Mining Group | Liuzhou Chemical vs. Wanhua Chemical Group | Liuzhou Chemical vs. Baoshan Iron Steel | Liuzhou Chemical vs. Shandong Gold Mining |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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