Correlation Between China State and Shimizu Corp
Can any of the company-specific risk be diversified away by investing in both China State and Shimizu Corp 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 Shimizu Corp 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 Shimizu Corp ADR, you can compare the effects of market volatilities on China State and Shimizu Corp 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 Shimizu Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of China State and Shimizu Corp.
Diversification Opportunities for China State and Shimizu Corp
0.26 | Correlation Coefficient |
Modest diversification
The 3 months correlation between China and Shimizu is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding China State Construction and Shimizu Corp ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shimizu Corp ADR 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 Shimizu Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shimizu Corp ADR has no effect on the direction of China State i.e., China State and Shimizu Corp go up and down completely randomly.
Pair Corralation between China State and Shimizu Corp
Assuming the 90 days horizon China State is expected to generate 1.44 times less return on investment than Shimizu Corp. But when comparing it to its historical volatility, China State Construction is 1.16 times less risky than Shimizu Corp. It trades about 0.03 of its potential returns per unit of risk. Shimizu Corp ADR is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 2,108 in Shimizu Corp ADR on September 3, 2024 and sell it today you would earn a total of 481.00 from holding Shimizu Corp ADR or generate 22.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 80.24% |
| Values | Daily Returns |
China State Construction vs. Shimizu Corp ADR
Performance |
| Timeline |
| China State Construction |
| Shimizu Corp ADR |
China State and Shimizu Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China State and Shimizu Corp
The main advantage of trading using opposite China State and Shimizu Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China State position performs unexpectedly, Shimizu Corp 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 Shimizu Corp will offset losses from the drop in Shimizu Corp's long position.| China State vs. CVW CleanTech | China State vs. China Clean Energy | China State vs. Ecoloclean Industrs | China State vs. SNDL Inc |
| Shimizu Corp vs. Babcock International Group | Shimizu Corp vs. Metallurgical of | Shimizu Corp vs. China State Construction | Shimizu Corp vs. Babcock International Group |
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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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