Correlation Between China State and Balfour Beatty
Can any of the company-specific risk be diversified away by investing in both China State and Balfour Beatty 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 State and Balfour Beatty into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between China State Construction and Balfour Beatty PLC, you can compare the effects of market volatilities on China State and Balfour Beatty 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 State with a short position of Balfour Beatty. Check out your portfolio center. Please also check ongoing floating volatility patterns of China State and Balfour Beatty.
Diversification Opportunities for China State and Balfour Beatty
0.48 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between China and Balfour is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding China State Construction and Balfour Beatty PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Balfour Beatty PLC and China State 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 State Construction are associated (or correlated) with Balfour Beatty. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Balfour Beatty PLC has no effect on the direction of China State i.e., China State and Balfour Beatty go up and down completely randomly.
Pair Corralation between China State and Balfour Beatty
If you would invest 1,022 in Balfour Beatty PLC on August 27, 2024 and sell it today you would earn a total of 0.00 from holding Balfour Beatty PLC or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 4.76% |
| Values | Daily Returns |
China State Construction vs. Balfour Beatty PLC
Performance |
| Timeline |
| China State Construction |
| Balfour Beatty PLC |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
China State and Balfour Beatty Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China State and Balfour Beatty
The main advantage of trading using opposite China State and Balfour Beatty positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China State position performs unexpectedly, Balfour Beatty 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 Balfour Beatty will offset losses from the drop in Balfour Beatty's long position.| China State vs. Aecom Technology | China State vs. Matrix Service Co | China State vs. MYR Group | China State vs. Fluor |
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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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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