Correlation Between DAX Index and China Construction
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By analyzing existing cross correlation between DAX Index and China Construction Bank, you can compare the effects of market volatilities on DAX Index 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 DAX Index with a short position of China Construction. Check out your portfolio center. Please also check ongoing floating volatility patterns of DAX Index and China Construction.
Diversification Opportunities for DAX Index and China Construction
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between DAX and China is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding DAX Index 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 DAX Index 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 DAX Index 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 DAX Index i.e., DAX Index and China Construction go up and down completely randomly.
Pair Corralation between DAX Index and China Construction
Assuming the 90 days trading horizon DAX Index is expected to generate 3.32 times less return on investment than China Construction. But when comparing it to its historical volatility, DAX Index is 3.42 times less risky than China Construction. It trades about 0.09 of its potential returns per unit of risk. China Construction Bank is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 63.00 in China Construction Bank on September 3, 2024 and sell it today you would earn a total of 9.00 from holding China Construction Bank or generate 14.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
DAX Index vs. China Construction Bank
Performance |
| Timeline |
DAX Index and China Construction Volatility Contrast
Predicted Return Density |
| Returns |
DAX Index
Pair trading matchups for DAX Index
China Construction Bank
Pair trading matchups for China Construction
Pair Trading with DAX Index and China Construction
The main advantage of trading using opposite DAX Index and China Construction positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DAX Index 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.| DAX Index vs. SPORT LISBOA E | DAX Index vs. FUYO GENERAL LEASE | DAX Index vs. Live Nation Entertainment | DAX Index vs. Transport International Holdings |
| China Construction vs. HSBC Holdings plc | China Construction vs. Bank of China | China Construction vs. Commonwealth Bank of |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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