Correlation Between VINCI SA and China Railway
Can any of the company-specific risk be diversified away by investing in both VINCI SA 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 SA 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 SA and China Railway Group, you can compare the effects of market volatilities on VINCI SA 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 SA with a short position of China Railway. Check out your portfolio center. Please also check ongoing floating volatility patterns of VINCI SA and China Railway.
Diversification Opportunities for VINCI SA and China Railway
-0.14 | Correlation Coefficient |
Good diversification
The 3 months correlation between VINCI and China is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding VINCI SA 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 SA 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 SA 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 SA i.e., VINCI SA and China Railway go up and down completely randomly.
Pair Corralation between VINCI SA and China Railway
Assuming the 90 days horizon VINCI SA is expected to under-perform the China Railway. But the pink sheet apears to be less risky and, when comparing its historical volatility, VINCI SA is 1.33 times less risky than China Railway. The pink sheet trades about -0.02 of its potential returns per unit of risk. The China Railway Group is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 44.00 in China Railway Group on December 3, 2024 and sell it today you would earn a total of 9.00 from holding China Railway Group or generate 20.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 47.39% |
| Values | Daily Returns |
VINCI SA vs. China Railway Group
Performance |
| Timeline |
| VINCI SA |
| China Railway Group |
VINCI SA and China Railway Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with VINCI SA and China Railway
The main advantage of trading using opposite VINCI SA and China Railway positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if VINCI SA 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 SA vs. Arcadis NV | ||
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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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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