Correlation Between China Railway and Hanison Construction
Can any of the company-specific risk be diversified away by investing in both China Railway and Hanison 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 China Railway and Hanison Construction 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 Hanison Construction Holdings, you can compare the effects of market volatilities on China Railway and Hanison 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 China Railway with a short position of Hanison Construction. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Railway and Hanison Construction.
Diversification Opportunities for China Railway and Hanison Construction
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between China and Hanison is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding China Railway Group and Hanison Construction Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hanison Construction 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 Hanison Construction. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hanison Construction has no effect on the direction of China Railway i.e., China Railway and Hanison Construction go up and down completely randomly.
Pair Corralation between China Railway and Hanison Construction
Assuming the 90 days horizon China Railway Group is expected to generate 2.35 times more return on investment than Hanison Construction. However, China Railway is 2.35 times more volatile than Hanison Construction Holdings. It trades about 0.06 of its potential returns per unit of risk. Hanison Construction Holdings is currently generating about 0.05 per unit of risk. If you would invest 17.00 in China Railway Group on August 29, 2024 and sell it today you would earn a total of 27.00 from holding China Railway Group or generate 158.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
China Railway Group vs. Hanison Construction Holdings
Performance |
| Timeline |
| China Railway Group |
| Hanison Construction |
China Railway and Hanison Construction Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Railway and Hanison Construction
The main advantage of trading using opposite China Railway and Hanison Construction positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Railway position performs unexpectedly, Hanison 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 Hanison Construction will offset losses from the drop in Hanison Construction's long position.| China Railway vs. Johnson Controls International | China Railway vs. China Energy Engineering | China Railway vs. AECOM | China Railway vs. Superior Plus Corp |
| Hanison Construction vs. Selective Insurance Group | Hanison Construction vs. United Natural Foods | Hanison Construction vs. Dairy Farm International | Hanison Construction vs. Universal Insurance Holdings |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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