Correlation Between China Construction and RATIONAL Aktiengesellscha
Can any of the company-specific risk be diversified away by investing in both China Construction and RATIONAL Aktiengesellscha 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 RATIONAL Aktiengesellscha 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 RATIONAL Aktiengesellschaft, you can compare the effects of market volatilities on China Construction and RATIONAL Aktiengesellscha 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 RATIONAL Aktiengesellscha. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Construction and RATIONAL Aktiengesellscha.
Diversification Opportunities for China Construction and RATIONAL Aktiengesellscha
-0.74 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between China and RATIONAL is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding China Construction Bank and RATIONAL Aktiengesellschaft in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RATIONAL Aktiengesellscha 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 RATIONAL Aktiengesellscha. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RATIONAL Aktiengesellscha has no effect on the direction of China Construction i.e., China Construction and RATIONAL Aktiengesellscha go up and down completely randomly.
Pair Corralation between China Construction and RATIONAL Aktiengesellscha
Assuming the 90 days horizon China Construction is expected to generate 1.57 times less return on investment than RATIONAL Aktiengesellscha. In addition to that, China Construction is 1.43 times more volatile than RATIONAL Aktiengesellschaft. It trades about 0.09 of its total potential returns per unit of risk. RATIONAL Aktiengesellschaft is currently generating about 0.19 per unit of volatility. If you would invest 82,500 in RATIONAL Aktiengesellschaft on November 3, 2024 and sell it today you would earn a total of 3,650 from holding RATIONAL Aktiengesellschaft or generate 4.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
China Construction Bank vs. RATIONAL Aktiengesellschaft
Performance |
| Timeline |
| China Construction Bank |
| RATIONAL Aktiengesellscha |
China Construction and RATIONAL Aktiengesellscha Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Construction and RATIONAL Aktiengesellscha
The main advantage of trading using opposite China Construction and RATIONAL Aktiengesellscha positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Construction position performs unexpectedly, RATIONAL Aktiengesellscha 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 RATIONAL Aktiengesellscha will offset losses from the drop in RATIONAL Aktiengesellscha's long position.| China Construction vs. ZhongAn Online P | China Construction vs. Goodyear Tire Rubber | China Construction vs. Rayonier Advanced Materials | China Construction vs. Materialise NV |
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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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