Correlation Between China Railway and Liaoning Dingjide
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By analyzing existing cross correlation between China Railway Construction and Liaoning Dingjide Petrochemical, you can compare the effects of market volatilities on China Railway and Liaoning Dingjide 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 Liaoning Dingjide. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Railway and Liaoning Dingjide.
Diversification Opportunities for China Railway and Liaoning Dingjide
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between China and Liaoning is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding China Railway Construction and Liaoning Dingjide Petrochemica in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Liaoning Dingjide 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 Liaoning Dingjide. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Liaoning Dingjide has no effect on the direction of China Railway i.e., China Railway and Liaoning Dingjide go up and down completely randomly.
Pair Corralation between China Railway and Liaoning Dingjide
Assuming the 90 days trading horizon China Railway Construction is expected to under-perform the Liaoning Dingjide. But the stock apears to be less risky and, when comparing its historical volatility, China Railway Construction is 1.96 times less risky than Liaoning Dingjide. The stock trades about -0.19 of its potential returns per unit of risk. The Liaoning Dingjide Petrochemical is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 3,045 in Liaoning Dingjide Petrochemical on September 29, 2024 and sell it today you would earn a total of 177.00 from holding Liaoning Dingjide Petrochemical or generate 5.81% 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. Liaoning Dingjide Petrochemica
Performance |
| Timeline |
| China Railway Constr |
| Liaoning Dingjide |
China Railway and Liaoning Dingjide Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Railway and Liaoning Dingjide
The main advantage of trading using opposite China Railway and Liaoning Dingjide positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Railway position performs unexpectedly, Liaoning Dingjide 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 Liaoning Dingjide will offset losses from the drop in Liaoning Dingjide'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 |
| Liaoning Dingjide vs. Zijin Mining Group | Liaoning Dingjide vs. Baoshan Iron Steel | Liaoning Dingjide vs. Shandong Gold Mining | Liaoning Dingjide vs. Rongsheng Petrochemical Co |
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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