Correlation Between Vulcan Materials and China Mobile
Can any of the company-specific risk be diversified away by investing in both Vulcan Materials and China Mobile 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 Vulcan Materials and China Mobile into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vulcan Materials and China Life Insurance, you can compare the effects of market volatilities on Vulcan Materials and China Mobile 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 Vulcan Materials with a short position of China Mobile. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vulcan Materials and China Mobile.
Diversification Opportunities for Vulcan Materials and China Mobile
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Vulcan and China is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Vulcan Materials and China Life Insurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Life Insurance and Vulcan Materials 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 Vulcan Materials are associated (or correlated) with China Mobile. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Life Insurance has no effect on the direction of Vulcan Materials i.e., Vulcan Materials and China Mobile go up and down completely randomly.
Pair Corralation between Vulcan Materials and China Mobile
Assuming the 90 days horizon Vulcan Materials is expected to generate 2.9 times less return on investment than China Mobile. But when comparing it to its historical volatility, Vulcan Materials is 2.46 times less risky than China Mobile. It trades about 0.06 of its potential returns per unit of risk. China Life Insurance is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 53.00 in China Life Insurance on September 4, 2024 and sell it today you would earn a total of 126.00 from holding China Life Insurance or generate 237.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vulcan Materials vs. China Life Insurance
Performance |
| Timeline |
| Vulcan Materials |
| China Life Insurance |
Vulcan Materials and China Mobile Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vulcan Materials and China Mobile
The main advantage of trading using opposite Vulcan Materials and China Mobile positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vulcan Materials position performs unexpectedly, China Mobile 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 Mobile will offset losses from the drop in China Mobile's long position.| Vulcan Materials vs. Superior Plus Corp | Vulcan Materials vs. NMI Holdings | Vulcan Materials vs. Origin Agritech | Vulcan Materials vs. SIVERS SEMICONDUCTORS AB |
| China Mobile vs. PARKEN Sport Entertainment | China Mobile vs. SEI INVESTMENTS | China Mobile vs. FIREWEED METALS P | China Mobile vs. Jacquet Metal Service |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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