Correlation Between Superior Plus and China Construction
Can any of the company-specific risk be diversified away by investing in both Superior Plus and China Construction at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Superior Plus and China Construction into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Superior Plus Corp and China Construction Bank, you can compare the effects of market volatilities on Superior Plus and China Construction 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 Superior Plus with a short position of China Construction. Check out your portfolio center. Please also check ongoing floating volatility patterns of Superior Plus and China Construction.
Diversification Opportunities for Superior Plus and China Construction
-0.59 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Superior and China is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Superior Plus Corp and China Construction Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Construction Bank and Superior Plus 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 Superior Plus Corp are associated (or correlated) with China Construction. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Construction Bank has no effect on the direction of Superior Plus i.e., Superior Plus and China Construction go up and down completely randomly.
Pair Corralation between Superior Plus and China Construction
Assuming the 90 days horizon Superior Plus Corp is expected to under-perform the China Construction. In addition to that, Superior Plus is 2.15 times more volatile than China Construction Bank. It trades about -0.04 of its total potential returns per unit of risk. China Construction Bank is currently generating about 0.06 per unit of volatility. If you would invest 72.00 in China Construction Bank on August 25, 2024 and sell it today you would earn a total of 2.00 from holding China Construction Bank or generate 2.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Superior Plus Corp vs. China Construction Bank
Performance |
| Timeline |
| Superior Plus Corp |
| China Construction Bank |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
OK
Superior Plus and China Construction Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Superior Plus and China Construction
The main advantage of trading using opposite Superior Plus and China Construction positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Superior Plus position performs unexpectedly, China Construction 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 China Construction will offset losses from the drop in China Construction's long position.| Superior Plus vs. Fast Retailing Co | Superior Plus vs. Auto Trader Group | Superior Plus vs. Monster Beverage Corp | Superior Plus vs. Suntory Beverage Food |
| China Construction vs. Rogers Communications | China Construction vs. Ribbon Communications | China Construction vs. Iridium Communications | China Construction vs. UMC Electronics 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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