Correlation Between China Railway and Beijing Shanghai
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By analyzing existing cross correlation between China Railway Construction and Beijing Shanghai High Speed, you can compare the effects of market volatilities on China Railway and Beijing Shanghai 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 Beijing Shanghai. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Railway and Beijing Shanghai.
Diversification Opportunities for China Railway and Beijing Shanghai
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between China and Beijing is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding China Railway Construction and Beijing Shanghai High Speed in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Beijing Shanghai High 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 Beijing Shanghai. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Beijing Shanghai High has no effect on the direction of China Railway i.e., China Railway and Beijing Shanghai go up and down completely randomly.
Pair Corralation between China Railway and Beijing Shanghai
Assuming the 90 days trading horizon China Railway Construction is expected to under-perform the Beijing Shanghai. But the stock apears to be less risky and, when comparing its historical volatility, China Railway Construction is 1.22 times less risky than Beijing Shanghai. The stock trades about -0.07 of its potential returns per unit of risk. The Beijing Shanghai High Speed is currently generating about 0.4 of returns per unit of risk over similar time horizon. If you would invest 551.00 in Beijing Shanghai High Speed on September 13, 2024 and sell it today you would earn a total of 86.00 from holding Beijing Shanghai High Speed or generate 15.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
China Railway Construction vs. Beijing Shanghai High Speed
Performance |
| Timeline |
| China Railway Constr |
| Beijing Shanghai High |
China Railway and Beijing Shanghai Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Railway and Beijing Shanghai
The main advantage of trading using opposite China Railway and Beijing Shanghai positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Railway position performs unexpectedly, Beijing Shanghai 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 Beijing Shanghai will offset losses from the drop in Beijing Shanghai's long position.| China Railway vs. Guangzhou Restaurants Group | China Railway vs. Jilin Jlu Communication | China Railway vs. Allwin Telecommunication Co | China Railway vs. Sunwave Communications Co |
| Beijing Shanghai vs. Ming Yang Smart | Beijing Shanghai vs. 159681 | Beijing Shanghai vs. 159005 | Beijing Shanghai vs. Loctek Ergonomic Technology |
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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