Correlation Between China Railway and Beijing Venustech
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By analyzing existing cross correlation between China Railway Materials and Beijing Venustech, you can compare the effects of market volatilities on China Railway and Beijing Venustech 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 China Railway with a short position of Beijing Venustech. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Railway and Beijing Venustech.
Diversification Opportunities for China Railway and Beijing Venustech
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between China and Beijing is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding China Railway Materials and Beijing Venustech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Beijing Venustech and China Railway 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 China Railway Materials are associated (or correlated) with Beijing Venustech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Beijing Venustech has no effect on the direction of China Railway i.e., China Railway and Beijing Venustech go up and down completely randomly.
Pair Corralation between China Railway and Beijing Venustech
Assuming the 90 days trading horizon China Railway is expected to generate 1.26 times less return on investment than Beijing Venustech. But when comparing it to its historical volatility, China Railway Materials is 1.47 times less risky than Beijing Venustech. It trades about 0.18 of its potential returns per unit of risk. Beijing Venustech is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 1,241 in Beijing Venustech on September 18, 2024 and sell it today you would earn a total of 420.00 from holding Beijing Venustech or generate 33.84% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Strong |
Accuracy | 98.33% |
Values | Daily Returns |
China Railway Materials vs. Beijing Venustech
Performance |
Timeline |
China Railway Materials |
Beijing Venustech |
China Railway and Beijing Venustech Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with China Railway and Beijing Venustech
The main advantage of trading using opposite China Railway and Beijing Venustech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Railway position performs unexpectedly, Beijing Venustech 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 Beijing Venustech will offset losses from the drop in Beijing Venustech's long position.China Railway vs. Cambricon Technologies Corp | China Railway vs. Loongson Technology Corp | China Railway vs. Shenzhen Fortune Trend | China Railway vs. Chongqing Road Bridge |
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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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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