Correlation Between CHINA TONTINE and China Railway
Can any of the company-specific risk be diversified away by investing in both CHINA TONTINE and China Railway 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 TONTINE and China Railway into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CHINA TONTINE WINES and China Railway Group, you can compare the effects of market volatilities on CHINA TONTINE and China Railway 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 TONTINE with a short position of China Railway. Check out your portfolio center. Please also check ongoing floating volatility patterns of CHINA TONTINE and China Railway.
Diversification Opportunities for CHINA TONTINE and China Railway
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between CHINA and China is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding CHINA TONTINE WINES and China Railway Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Railway Group and CHINA TONTINE 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 TONTINE WINES are associated (or correlated) with China Railway. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Railway Group has no effect on the direction of CHINA TONTINE i.e., CHINA TONTINE and China Railway go up and down completely randomly.
Pair Corralation between CHINA TONTINE and China Railway
Assuming the 90 days trading horizon CHINA TONTINE WINES is expected to generate 7.26 times more return on investment than China Railway. However, CHINA TONTINE is 7.26 times more volatile than China Railway Group. It trades about 0.04 of its potential returns per unit of risk. China Railway Group is currently generating about 0.06 per unit of risk. If you would invest 0.70 in CHINA TONTINE WINES on September 23, 2024 and sell it today you would earn a total of 6.30 from holding CHINA TONTINE WINES or generate 900.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 99.8% |
| Values | Daily Returns |
CHINA TONTINE WINES vs. China Railway Group
Performance |
| Timeline |
| CHINA TONTINE WINES |
| China Railway Group |
CHINA TONTINE and China Railway Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CHINA TONTINE and China Railway
The main advantage of trading using opposite CHINA TONTINE and China Railway positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CHINA TONTINE position performs unexpectedly, China Railway 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 Railway will offset losses from the drop in China Railway's long position.| CHINA TONTINE vs. Diageo plc | CHINA TONTINE vs. Pernod Ricard SA | CHINA TONTINE vs. Hawesko Holding AG | CHINA TONTINE vs. ANDREW PELLER LTD |
| China Railway vs. CHINA TONTINE WINES | China Railway vs. SEI INVESTMENTS | China Railway vs. Marie Brizard Wine | China Railway vs. PennantPark Investment |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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