Correlation Between JPMorgan Chase and China Construction
Can any of the company-specific risk be diversified away by investing in both JPMorgan Chase and China Construction 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 JPMorgan Chase and China Construction into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between JPMorgan Chase Co and China Construction Bank, you can compare the effects of market volatilities on JPMorgan Chase and China Construction 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 JPMorgan Chase with a short position of China Construction. Check out your portfolio center. Please also check ongoing floating volatility patterns of JPMorgan Chase and China Construction.
Diversification Opportunities for JPMorgan Chase and China Construction
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between JPMorgan and China is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding JPMorgan Chase Co and China Construction Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Construction Bank and JPMorgan Chase 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 JPMorgan Chase Co are associated (or correlated) with China Construction. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Construction Bank has no effect on the direction of JPMorgan Chase i.e., JPMorgan Chase and China Construction go up and down completely randomly.
Pair Corralation between JPMorgan Chase and China Construction
Assuming the 90 days horizon JPMorgan Chase is expected to generate 1.52 times less return on investment than China Construction. But when comparing it to its historical volatility, JPMorgan Chase Co is 2.01 times less risky than China Construction. It trades about 0.13 of its potential returns per unit of risk. China Construction Bank is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 39.00 in China Construction Bank on October 20, 2024 and sell it today you would earn a total of 36.00 from holding China Construction Bank or generate 92.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
JPMorgan Chase Co vs. China Construction Bank
Performance |
| Timeline |
| JPMorgan Chase |
| China Construction Bank |
JPMorgan Chase and China Construction Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with JPMorgan Chase and China Construction
The main advantage of trading using opposite JPMorgan Chase and China Construction positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if JPMorgan Chase position performs unexpectedly, China Construction 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 China Construction will offset losses from the drop in China Construction's long position.| JPMorgan Chase vs. PLAY2CHILL SA ZY | JPMorgan Chase vs. PLAYWAY SA ZY 10 | JPMorgan Chase vs. Gaming and Leisure | JPMorgan Chase vs. Tradegate AG Wertpapierhandelsbank |
| China Construction vs. Boyd Gaming | China Construction vs. Aya Gold Silver | China Construction vs. CONTAGIOUS GAMING INC | China Construction vs. GigaMedia |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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