Correlation Between China Railway and Sinomach General
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By analyzing existing cross correlation between China Railway Construction and Sinomach General Machinery, you can compare the effects of market volatilities on China Railway and Sinomach General 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 Sinomach General. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Railway and Sinomach General.
Diversification Opportunities for China Railway and Sinomach General
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between China and Sinomach is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding China Railway Construction and Sinomach General Machinery in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sinomach General Mac 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 Sinomach General. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sinomach General Mac has no effect on the direction of China Railway i.e., China Railway and Sinomach General go up and down completely randomly.
Pair Corralation between China Railway and Sinomach General
Assuming the 90 days trading horizon China Railway is expected to generate 1.11 times less return on investment than Sinomach General. But when comparing it to its historical volatility, China Railway Construction is 1.6 times less risky than Sinomach General. It trades about 0.08 of its potential returns per unit of risk. Sinomach General Machinery is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 1,511 in Sinomach General Machinery on November 28, 2024 and sell it today you would earn a total of 19.00 from holding Sinomach General Machinery or generate 1.26% 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. Sinomach General Machinery
Performance |
| Timeline |
| China Railway Constr |
| Sinomach General Mac |
China Railway and Sinomach General Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Railway and Sinomach General
The main advantage of trading using opposite China Railway and Sinomach General positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Railway position performs unexpectedly, Sinomach General 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 Sinomach General will offset losses from the drop in Sinomach General's long position.| China Railway vs. Industrial and Commercial | China Railway vs. Agricultural Bank of | China Railway vs. China Construction Bank | China Railway vs. Bank of China |
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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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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