Correlation Between BII Railway and CHINA EDUCATION
Can any of the company-specific risk be diversified away by investing in both BII Railway and CHINA EDUCATION 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 BII Railway and CHINA EDUCATION into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BII Railway Transportation and CHINA EDUCATION GROUP, you can compare the effects of market volatilities on BII Railway and CHINA EDUCATION 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 BII Railway with a short position of CHINA EDUCATION. Check out your portfolio center. Please also check ongoing floating volatility patterns of BII Railway and CHINA EDUCATION.
Diversification Opportunities for BII Railway and CHINA EDUCATION
-0.35 | Correlation Coefficient |
Very good diversification
The 3 months correlation between BII and CHINA is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding BII Railway Transportation and CHINA EDUCATION GROUP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CHINA EDUCATION GROUP and BII Railway 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 BII Railway Transportation are associated (or correlated) with CHINA EDUCATION. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CHINA EDUCATION GROUP has no effect on the direction of BII Railway i.e., BII Railway and CHINA EDUCATION go up and down completely randomly.
Pair Corralation between BII Railway and CHINA EDUCATION
Assuming the 90 days horizon BII Railway is expected to generate 5.27 times less return on investment than CHINA EDUCATION. But when comparing it to its historical volatility, BII Railway Transportation is 1.51 times less risky than CHINA EDUCATION. It trades about 0.07 of its potential returns per unit of risk. CHINA EDUCATION GROUP is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest 38.00 in CHINA EDUCATION GROUP on November 7, 2024 and sell it today you would earn a total of 4.00 from holding CHINA EDUCATION GROUP or generate 10.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
BII Railway Transportation vs. CHINA EDUCATION GROUP
Performance |
| Timeline |
| BII Railway Transpor |
| CHINA EDUCATION GROUP |
BII Railway and CHINA EDUCATION Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BII Railway and CHINA EDUCATION
The main advantage of trading using opposite BII Railway and CHINA EDUCATION positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BII Railway position performs unexpectedly, CHINA EDUCATION 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 EDUCATION will offset losses from the drop in CHINA EDUCATION's long position.| BII Railway vs. VITEC SOFTWARE GROUP | BII Railway vs. Check Point Software | BII Railway vs. Unity Software | BII Railway vs. CyberArk Software |
| CHINA EDUCATION vs. Ribbon Communications | CHINA EDUCATION vs. Molina Healthcare | CHINA EDUCATION vs. Zoom Video Communications | CHINA EDUCATION vs. WillScot Mobile Mini |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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