Correlation Between American Funds and China Railway
Can any of the company-specific risk be diversified away by investing in both American Funds and China Railway 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 American Funds and China Railway into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Funds Fundamental and China Railway Group, you can compare the effects of market volatilities on American Funds and China Railway 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 American Funds with a short position of China Railway. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Funds and China Railway.
Diversification Opportunities for American Funds and China Railway
0.09 | Correlation Coefficient |
Significant diversification
The 3 months correlation between American and China is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding American Funds Fundamental and China Railway Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Railway Group and American Funds 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 American Funds Fundamental are associated (or correlated) with China Railway. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Railway Group has no effect on the direction of American Funds i.e., American Funds and China Railway go up and down completely randomly.
Pair Corralation between American Funds and China Railway
Assuming the 90 days horizon American Funds Fundamental is expected to generate 0.63 times more return on investment than China Railway. However, American Funds Fundamental is 1.58 times less risky than China Railway. It trades about 0.2 of its potential returns per unit of risk. China Railway Group is currently generating about -0.05 per unit of risk. If you would invest 8,096 in American Funds Fundamental on November 3, 2024 and sell it today you would earn a total of 322.00 from holding American Funds Fundamental or generate 3.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 91.3% |
| Values | Daily Returns |
American Funds Fundamental vs. China Railway Group
Performance |
| Timeline |
| American Funds Funda |
| China Railway Group |
American Funds and China Railway Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Funds and China Railway
The main advantage of trading using opposite American Funds and China Railway positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Funds position performs unexpectedly, China Railway 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 Railway will offset losses from the drop in China Railway's long position.| American Funds vs. World Energy Fund | American Funds vs. Energy Services Fund | American Funds vs. Alpsalerian Energy Infrastructure | American Funds vs. Icon Natural Resources |
| China Railway vs. The Hanover Insurance | China Railway vs. VIENNA INSURANCE GR | China Railway vs. De Grey Mining | China Railway vs. REVO INSURANCE SPA |
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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
Other Complementary Tools
| Odds Of Bankruptcy Get analysis of equity chance of financial distress in the next 2 years | |
| Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments | |
| Instant Ratings Determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Money Flow Index Determine momentum by analyzing Money Flow Index and other technical indicators | |
| Portfolio Suggestion Get suggestions outside of your existing asset allocation including your own model portfolios |