Correlation Between Vinci S and China Railway
Can any of the company-specific risk be diversified away by investing in both Vinci S and China Railway 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 Vinci S and China Railway into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vinci S A and China Railway Group, you can compare the effects of market volatilities on Vinci S and China Railway 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 Vinci S with a short position of China Railway. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vinci S and China Railway.
Diversification Opportunities for Vinci S and China Railway
-0.63 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Vinci and China is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Vinci S A and China Railway Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Railway Group and Vinci S 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 Vinci S A are associated (or correlated) with China Railway. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Railway Group has no effect on the direction of Vinci S i.e., Vinci S and China Railway go up and down completely randomly.
Pair Corralation between Vinci S and China Railway
Assuming the 90 days horizon Vinci S A is expected to under-perform the China Railway. But the stock apears to be less risky and, when comparing its historical volatility, Vinci S A is 1.65 times less risky than China Railway. The stock trades about -0.25 of its potential returns per unit of risk. The China Railway Group is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest 47.00 in China Railway Group on August 28, 2024 and sell it today you would lose (1.00) from holding China Railway Group or give up 2.13% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vinci S A vs. China Railway Group
Performance |
| Timeline |
| Vinci S A |
| China Railway Group |
Vinci S and China Railway Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vinci S and China Railway
The main advantage of trading using opposite Vinci S and China Railway positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vinci S position performs unexpectedly, China Railway 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 Railway will offset losses from the drop in China Railway's long position.| Vinci S vs. China Railway Construction | Vinci S vs. AECOM | Vinci S vs. Superior Plus Corp | Vinci S vs. NMI Holdings |
| China Railway vs. China Railway Construction | China Railway vs. AECOM | China Railway vs. Superior Plus Corp | China Railway vs. NMI Holdings |
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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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