Correlation Between China Railway and Bilfinger
Can any of the company-specific risk be diversified away by investing in both China Railway and Bilfinger 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 Railway and Bilfinger into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between China Railway Group and Bilfinger SE, you can compare the effects of market volatilities on China Railway and Bilfinger 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 Railway with a short position of Bilfinger. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Railway and Bilfinger.
Diversification Opportunities for China Railway and Bilfinger
0.16 | Correlation Coefficient |
Average diversification
The 3 months correlation between China and Bilfinger is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding China Railway Group and Bilfinger SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bilfinger SE and China 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 China Railway Group are associated (or correlated) with Bilfinger. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bilfinger SE has no effect on the direction of China Railway i.e., China Railway and Bilfinger go up and down completely randomly.
Pair Corralation between China Railway and Bilfinger
Assuming the 90 days horizon China Railway is expected to generate 12.28 times less return on investment than Bilfinger. In addition to that, China Railway is 1.16 times more volatile than Bilfinger SE. It trades about 0.01 of its total potential returns per unit of risk. Bilfinger SE is currently generating about 0.14 per unit of volatility. If you would invest 4,520 in Bilfinger SE on September 13, 2024 and sell it today you would earn a total of 245.00 from holding Bilfinger SE or generate 5.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
China Railway Group vs. Bilfinger SE
Performance |
| Timeline |
| China Railway Group |
| Bilfinger SE |
China Railway and Bilfinger Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Railway and Bilfinger
The main advantage of trading using opposite China Railway and Bilfinger positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Railway position performs unexpectedly, Bilfinger 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 Bilfinger will offset losses from the drop in Bilfinger's long position.| China Railway vs. GALENA MINING LTD | China Railway vs. Spirent Communications plc | China Railway vs. Perseus Mining Limited | China Railway vs. Iridium Communications |
| Bilfinger vs. Sumitomo Rubber Industries | Bilfinger vs. Summit Materials | Bilfinger vs. Eagle Materials | Bilfinger vs. Mitsubishi Materials |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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