Correlation Between Guangshen Railway and CSX
Can any of the company-specific risk be diversified away by investing in both Guangshen Railway and CSX 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 Guangshen Railway and CSX into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Guangshen Railway and CSX Corporation, you can compare the effects of market volatilities on Guangshen Railway and CSX 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 Guangshen Railway with a short position of CSX. Check out your portfolio center. Please also check ongoing floating volatility patterns of Guangshen Railway and CSX.
Diversification Opportunities for Guangshen Railway and CSX
-0.27 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Guangshen and CSX is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Guangshen Railway and CSX Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CSX Corporation and Guangshen 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 Guangshen Railway are associated (or correlated) with CSX. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CSX Corporation has no effect on the direction of Guangshen Railway i.e., Guangshen Railway and CSX go up and down completely randomly.
Pair Corralation between Guangshen Railway and CSX
Assuming the 90 days horizon Guangshen Railway is expected to generate 7.72 times more return on investment than CSX. However, Guangshen Railway is 7.72 times more volatile than CSX Corporation. It trades about 0.07 of its potential returns per unit of risk. CSX Corporation is currently generating about 0.03 per unit of risk. If you would invest 15.00 in Guangshen Railway on September 12, 2024 and sell it today you would earn a total of 9.00 from holding Guangshen Railway or generate 60.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 52.87% |
| Values | Daily Returns |
Guangshen Railway vs. CSX Corp.
Performance |
| Timeline |
| Guangshen Railway |
| CSX Corporation |
Guangshen Railway and CSX Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Guangshen Railway and CSX
The main advantage of trading using opposite Guangshen Railway and CSX positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Guangshen Railway position performs unexpectedly, CSX 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 CSX will offset losses from the drop in CSX's long position.| Guangshen Railway vs. Trinity Industries | Guangshen Railway vs. CSX Corporation | Guangshen Railway vs. Norfolk Southern | Guangshen Railway vs. Greenbrier Companies |
| CSX vs. Union Pacific | CSX vs. Canadian National Railway | CSX vs. Canadian Pacific Railway | CSX vs. Westinghouse Air Brake |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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