Correlation Between Chongqing Changan and China Railway
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By analyzing existing cross correlation between Chongqing Changan Automobile and China Railway Construction, you can compare the effects of market volatilities on Chongqing Changan 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 Chongqing Changan with a short position of China Railway. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chongqing Changan and China Railway.
Diversification Opportunities for Chongqing Changan and China Railway
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Chongqing and China is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Chongqing Changan Automobile 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 Chongqing Changan 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 Chongqing Changan Automobile 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 Chongqing Changan i.e., Chongqing Changan and China Railway go up and down completely randomly.
Pair Corralation between Chongqing Changan and China Railway
Assuming the 90 days trading horizon Chongqing Changan is expected to generate 1.59 times less return on investment than China Railway. In addition to that, Chongqing Changan is 1.47 times more volatile than China Railway Construction. It trades about 0.05 of its total potential returns per unit of risk. China Railway Construction is currently generating about 0.11 per unit of volatility. If you would invest 916.00 in China Railway Construction on September 26, 2024 and sell it today you would earn a total of 23.00 from holding China Railway Construction or generate 2.51% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Strong |
Accuracy | 100.0% |
Values | Daily Returns |
Chongqing Changan Automobile vs. China Railway Construction
Performance |
Timeline |
Chongqing Changan |
China Railway Constr |
Chongqing Changan and China Railway Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Chongqing Changan and China Railway
The main advantage of trading using opposite Chongqing Changan and China Railway positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chongqing Changan 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.Chongqing Changan vs. New China Life | Chongqing Changan vs. Ming Yang Smart | Chongqing Changan vs. 159681 | Chongqing Changan vs. 159005 |
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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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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