Correlation Between China Construction and EON SE
Can any of the company-specific risk be diversified away by investing in both China Construction and EON SE 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 China Construction and EON SE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between China Construction Bank and EON SE, you can compare the effects of market volatilities on China Construction and EON SE 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 Construction with a short position of EON SE. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Construction and EON SE.
Diversification Opportunities for China Construction and EON SE
-0.61 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between China and EON is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding China Construction Bank and EON SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EON SE and China Construction 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 Construction Bank are associated (or correlated) with EON SE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EON SE has no effect on the direction of China Construction i.e., China Construction and EON SE go up and down completely randomly.
Pair Corralation between China Construction and EON SE
Assuming the 90 days horizon China Construction Bank is expected to generate 2.17 times more return on investment than EON SE. However, China Construction is 2.17 times more volatile than EON SE. It trades about -0.01 of its potential returns per unit of risk. EON SE is currently generating about -0.08 per unit of risk. If you would invest 73.00 in China Construction Bank on September 1, 2024 and sell it today you would lose (1.00) from holding China Construction Bank or give up 1.37% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
China Construction Bank vs. EON SE
Performance |
| Timeline |
| China Construction Bank |
| EON SE |
China Construction and EON SE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Construction and EON SE
The main advantage of trading using opposite China Construction and EON SE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Construction position performs unexpectedly, EON SE 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 EON SE will offset losses from the drop in EON SE's long position.| China Construction vs. OURGAME INTHOLDL 00005 | China Construction vs. Penn National Gaming | China Construction vs. Marie Brizard Wine | China Construction vs. Media and Games |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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