Correlation Between China Railway and Vinci S
Can any of the company-specific risk be diversified away by investing in both China Railway and Vinci S 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 Vinci S 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 Vinci S A, you can compare the effects of market volatilities on China Railway and Vinci S 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 Vinci S. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Railway and Vinci S.
Diversification Opportunities for China Railway and Vinci S
-0.57 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between China and Vinci is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding China Railway Group and Vinci S A in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vinci S A 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 Vinci S. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vinci S A has no effect on the direction of China Railway i.e., China Railway and Vinci S go up and down completely randomly.
Pair Corralation between China Railway and Vinci S
Assuming the 90 days horizon China Railway Group is expected to under-perform the Vinci S. In addition to that, China Railway is 1.65 times more volatile than Vinci S A. It trades about -0.1 of its total potential returns per unit of risk. Vinci S A is currently generating about -0.1 per unit of volatility. If you would invest 10,235 in Vinci S A on September 3, 2024 and sell it today you would lose (269.00) from holding Vinci S A or give up 2.63% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
China Railway Group vs. Vinci S A
Performance |
| Timeline |
| China Railway Group |
| Vinci S A |
China Railway and Vinci S Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Railway and Vinci S
The main advantage of trading using opposite China Railway and Vinci S positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Railway position performs unexpectedly, Vinci S 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 Vinci S will offset losses from the drop in Vinci S's long position.| China Railway vs. Sabra Health Care | China Railway vs. Southwest Airlines Co | China Railway vs. EPSILON HEALTHCARE LTD | China Railway vs. National Health Investors |
| Vinci S vs. Larsen Toubro Limited | Vinci S vs. China Railway Group | Vinci S vs. China Communications Construction | Vinci S vs. Superior Plus Corp |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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