Correlation Between China Railway and Chengdu PUTIAN
Can any of the company-specific risk be diversified away by investing in both China Railway and Chengdu PUTIAN 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 Chengdu PUTIAN 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 Chengdu PUTIAN Telecommunications, you can compare the effects of market volatilities on China Railway and Chengdu PUTIAN 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 Chengdu PUTIAN. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Railway and Chengdu PUTIAN.
Diversification Opportunities for China Railway and Chengdu PUTIAN
-0.26 | Correlation Coefficient |
Very good diversification
The 3 months correlation between China and Chengdu is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding China Railway Signal and Chengdu PUTIAN Telecommunicati in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chengdu PUTIAN Telec 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 Chengdu PUTIAN. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chengdu PUTIAN Telec has no effect on the direction of China Railway i.e., China Railway and Chengdu PUTIAN go up and down completely randomly.
Pair Corralation between China Railway and Chengdu PUTIAN
Assuming the 90 days horizon China Railway Signal is expected to under-perform the Chengdu PUTIAN. But the stock apears to be less risky and, when comparing its historical volatility, China Railway Signal is 1.52 times less risky than Chengdu PUTIAN. The stock trades about -0.04 of its potential returns per unit of risk. The Chengdu PUTIAN Telecommunications is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 7.15 in Chengdu PUTIAN Telecommunications on November 2, 2024 and sell it today you would earn a total of 0.65 from holding Chengdu PUTIAN Telecommunications or generate 9.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
China Railway Signal vs. Chengdu PUTIAN Telecommunicati
Performance |
| Timeline |
| China Railway Signal |
| Chengdu PUTIAN Telec |
China Railway and Chengdu PUTIAN Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Railway and Chengdu PUTIAN
The main advantage of trading using opposite China Railway and Chengdu PUTIAN positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Railway position performs unexpectedly, Chengdu PUTIAN 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 Chengdu PUTIAN will offset losses from the drop in Chengdu PUTIAN's long position.| China Railway vs. Harmony Gold Mining | China Railway vs. STORE ELECTRONIC | China Railway vs. Methode Electronics | China Railway vs. Eurasia Mining Plc |
| Chengdu PUTIAN vs. AOYAMA TRADING | Chengdu PUTIAN vs. Virtus Investment Partners | Chengdu PUTIAN vs. ZURICH INSURANCE GROUP | Chengdu PUTIAN vs. Japan Post Insurance |
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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