Correlation Between Canadian Utilities and China Construction
Can any of the company-specific risk be diversified away by investing in both Canadian Utilities and China 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 Canadian Utilities and China Construction into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Canadian Utilities Limited and China Construction Bank, you can compare the effects of market volatilities on Canadian Utilities and China 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 Canadian Utilities with a short position of China Construction. Check out your portfolio center. Please also check ongoing floating volatility patterns of Canadian Utilities and China Construction.
Diversification Opportunities for Canadian Utilities and China Construction
0.52 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Canadian and China is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Canadian Utilities Limited and China Construction Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Construction Bank and Canadian Utilities 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 Canadian Utilities Limited are associated (or correlated) with China Construction. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Construction Bank has no effect on the direction of Canadian Utilities i.e., Canadian Utilities and China Construction go up and down completely randomly.
Pair Corralation between Canadian Utilities and China Construction
Assuming the 90 days horizon Canadian Utilities is expected to generate 3.27 times less return on investment than China Construction. But when comparing it to its historical volatility, Canadian Utilities Limited is 1.97 times less risky than China Construction. It trades about 0.02 of its potential returns per unit of risk. China Construction Bank is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 56.00 in China Construction Bank on September 12, 2024 and sell it today you would earn a total of 21.00 from holding China Construction Bank or generate 37.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Canadian Utilities Limited vs. China Construction Bank
Performance |
| Timeline |
| Canadian Utilities |
| China Construction Bank |
Canadian Utilities and China Construction Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Canadian Utilities and China Construction
The main advantage of trading using opposite Canadian Utilities and China Construction positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Canadian Utilities position performs unexpectedly, China 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 China Construction will offset losses from the drop in China Construction's long position.| Canadian Utilities vs. Dominion Energy | Canadian Utilities vs. Sempra | Canadian Utilities vs. Superior Plus Corp | Canadian Utilities vs. NMI Holdings |
| China Construction vs. Chesapeake Utilities | China Construction vs. AM EAGLE OUTFITTERS | China Construction vs. Playa Hotels Resorts | China Construction vs. Canadian Utilities Limited |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
Other Complementary Tools
| Efficient Frontier Plot and analyze your portfolio and positions against risk-return landscape of the market. | |
| Balance Of Power Check stock momentum by analyzing Balance Of Power indicator and other technical ratios | |
| FinTech Suite Use AI to screen and filter profitable investment opportunities | |
| Global Markets Map Get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes | |
| Companies Directory Evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals |