Correlation Between China Railway and Superior Plus
Can any of the company-specific risk be diversified away by investing in both China Railway and Superior Plus 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 Railway and Superior Plus into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between China Railway Signal and Superior Plus Corp, you can compare the effects of market volatilities on China Railway and Superior Plus 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 Railway with a short position of Superior Plus. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Railway and Superior Plus.
Diversification Opportunities for China Railway and Superior Plus
-0.29 | Correlation Coefficient |
Very good diversification
The 3 months correlation between China and Superior is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding China Railway Signal and Superior Plus Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Superior Plus Corp and China 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 China Railway Signal are associated (or correlated) with Superior Plus. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Superior Plus Corp has no effect on the direction of China Railway i.e., China Railway and Superior Plus go up and down completely randomly.
Pair Corralation between China Railway and Superior Plus
Assuming the 90 days horizon China Railway Signal is expected to generate 3.95 times more return on investment than Superior Plus. However, China Railway is 3.95 times more volatile than Superior Plus Corp. It trades about 0.08 of its potential returns per unit of risk. Superior Plus Corp is currently generating about -0.01 per unit of risk. If you would invest 4.69 in China Railway Signal on September 12, 2024 and sell it today you would earn a total of 33.31 from holding China Railway Signal or generate 710.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
China Railway Signal vs. Superior Plus Corp
Performance |
| Timeline |
| China Railway Signal |
| Superior Plus Corp |
China Railway and Superior Plus Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Railway and Superior Plus
The main advantage of trading using opposite China Railway and Superior Plus positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Railway position performs unexpectedly, Superior Plus 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 Superior Plus will offset losses from the drop in Superior Plus' long position.| China Railway vs. Dave Busters Entertainment | China Railway vs. PLAYSTUDIOS A DL 0001 | China Railway vs. CNVISION MEDIA | China Railway vs. PT Global Mediacom |
| Superior Plus vs. AIR PRODCHEMICALS | Superior Plus vs. Suntory Beverage Food | Superior Plus vs. Molson Coors Beverage | Superior Plus vs. Monster Beverage Corp |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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