Correlation Between China Construction and Hellenic Petroleum
Can any of the company-specific risk be diversified away by investing in both China Construction and Hellenic Petroleum 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 Hellenic Petroleum 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 Hellenic Petroleum SA, you can compare the effects of market volatilities on China Construction and Hellenic Petroleum 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 Hellenic Petroleum. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Construction and Hellenic Petroleum.
Diversification Opportunities for China Construction and Hellenic Petroleum
-0.52 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between China and Hellenic is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding China Construction Bank and Hellenic Petroleum SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hellenic Petroleum 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 Hellenic Petroleum. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hellenic Petroleum has no effect on the direction of China Construction i.e., China Construction and Hellenic Petroleum go up and down completely randomly.
Pair Corralation between China Construction and Hellenic Petroleum
Assuming the 90 days horizon China Construction Bank is expected to generate 1.49 times more return on investment than Hellenic Petroleum. However, China Construction is 1.49 times more volatile than Hellenic Petroleum SA. It trades about 0.03 of its potential returns per unit of risk. Hellenic Petroleum SA is currently generating about 0.02 per unit of risk. If you would invest 56.00 in China Construction Bank on August 30, 2024 and sell it today you would earn a total of 15.00 from holding China Construction Bank or generate 26.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.8% |
| Values | Daily Returns |
China Construction Bank vs. Hellenic Petroleum SA
Performance |
| Timeline |
| China Construction Bank |
| Hellenic Petroleum |
China Construction and Hellenic Petroleum Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Construction and Hellenic Petroleum
The main advantage of trading using opposite China Construction and Hellenic Petroleum positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Construction position performs unexpectedly, Hellenic Petroleum 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 Hellenic Petroleum will offset losses from the drop in Hellenic Petroleum's long position.| China Construction vs. Tyson Foods | China Construction vs. Performance Food Group | China Construction vs. ALTAIR RES INC | China Construction vs. AUSTEVOLL SEAFOOD |
| Hellenic Petroleum vs. MICRONIC MYDATA | Hellenic Petroleum vs. Darden Restaurants | Hellenic Petroleum vs. DATAGROUP SE | Hellenic Petroleum vs. DICKER DATA LTD |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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