Correlation Between China Communications and Bilfinger
Can any of the company-specific risk be diversified away by investing in both China Communications 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 Communications and Bilfinger into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between China Communications Construction and Bilfinger SE, you can compare the effects of market volatilities on China Communications 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 Communications with a short position of Bilfinger. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Communications and Bilfinger.
Diversification Opportunities for China Communications and Bilfinger
-0.17 | Correlation Coefficient |
Good diversification
The 3 months correlation between China and Bilfinger is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding China Communications Construct and Bilfinger SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bilfinger SE and China Communications 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 Communications Construction 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 Communications i.e., China Communications and Bilfinger go up and down completely randomly.
Pair Corralation between China Communications and Bilfinger
Assuming the 90 days horizon China Communications Construction is expected to generate 3.92 times more return on investment than Bilfinger. However, China Communications is 3.92 times more volatile than Bilfinger SE. It trades about 0.21 of its potential returns per unit of risk. Bilfinger SE is currently generating about 0.14 per unit of risk. If you would invest 47.00 in China Communications Construction on September 13, 2024 and sell it today you would earn a total of 15.00 from holding China Communications Construction or generate 31.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
China Communications Construct vs. Bilfinger SE
Performance |
| Timeline |
| China Communications |
| Bilfinger SE |
China Communications and Bilfinger Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Communications and Bilfinger
The main advantage of trading using opposite China Communications and Bilfinger positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Communications 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 Communications vs. SANOK RUBBER ZY | China Communications vs. ECHO INVESTMENT ZY | China Communications vs. Summit Materials | China Communications vs. SLR Investment Corp |
| 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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