Correlation Between SENECA FOODS-A and China Railway
Can any of the company-specific risk be diversified away by investing in both SENECA FOODS-A 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 SENECA FOODS-A and China Railway into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SENECA FOODS A and China Railway Construction, you can compare the effects of market volatilities on SENECA FOODS-A 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 SENECA FOODS-A with a short position of China Railway. Check out your portfolio center. Please also check ongoing floating volatility patterns of SENECA FOODS-A and China Railway.
Diversification Opportunities for SENECA FOODS-A and China Railway
-0.54 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between SENECA and China is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding SENECA FOODS A and China Railway Construction in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Railway Constr and SENECA FOODS-A 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 SENECA FOODS 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 Constr has no effect on the direction of SENECA FOODS-A i.e., SENECA FOODS-A and China Railway go up and down completely randomly.
Pair Corralation between SENECA FOODS-A and China Railway
Assuming the 90 days trading horizon SENECA FOODS-A is expected to generate 1.18 times less return on investment than China Railway. But when comparing it to its historical volatility, SENECA FOODS A is 1.07 times less risky than China Railway. It trades about 0.11 of its potential returns per unit of risk. China Railway Construction is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 49.00 in China Railway Construction on October 18, 2024 and sell it today you would earn a total of 15.00 from holding China Railway Construction or generate 30.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 98.77% |
| Values | Daily Returns |
SENECA FOODS A vs. China Railway Construction
Performance |
| Timeline |
| SENECA FOODS A |
| China Railway Constr |
SENECA FOODS-A and China Railway Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SENECA FOODS-A and China Railway
The main advantage of trading using opposite SENECA FOODS-A and China Railway positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SENECA FOODS-A 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.| SENECA FOODS-A vs. PARKEN Sport Entertainment | SENECA FOODS-A vs. Gaztransport Technigaz SA | SENECA FOODS-A vs. BII Railway Transportation | SENECA FOODS-A vs. AEGEAN AIRLINES |
| China Railway vs. TYSON FOODS A | China Railway vs. ZURICH INSURANCE GROUP | China Railway vs. United Natural Foods | China Railway vs. SENECA FOODS A |
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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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