Correlation Between Zhejiang Construction and Kunshan Guoli
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By analyzing existing cross correlation between Zhejiang Construction Investment and Kunshan Guoli Electronic, you can compare the effects of market volatilities on Zhejiang Construction and Kunshan Guoli 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 Zhejiang Construction with a short position of Kunshan Guoli. Check out your portfolio center. Please also check ongoing floating volatility patterns of Zhejiang Construction and Kunshan Guoli.
Diversification Opportunities for Zhejiang Construction and Kunshan Guoli
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Zhejiang and Kunshan is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Zhejiang Construction Investme and Kunshan Guoli Electronic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kunshan Guoli Electronic and Zhejiang Construction 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 Zhejiang Construction Investment are associated (or correlated) with Kunshan Guoli. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kunshan Guoli Electronic has no effect on the direction of Zhejiang Construction i.e., Zhejiang Construction and Kunshan Guoli go up and down completely randomly.
Pair Corralation between Zhejiang Construction and Kunshan Guoli
Assuming the 90 days trading horizon Zhejiang Construction is expected to generate 1.16 times less return on investment than Kunshan Guoli. But when comparing it to its historical volatility, Zhejiang Construction Investment is 1.14 times less risky than Kunshan Guoli. It trades about 0.15 of its potential returns per unit of risk. Kunshan Guoli Electronic is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest 3,014 in Kunshan Guoli Electronic on September 3, 2024 and sell it today you would earn a total of 1,246 from holding Kunshan Guoli Electronic or generate 41.34% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 98.28% |
Values | Daily Returns |
Zhejiang Construction Investme vs. Kunshan Guoli Electronic
Performance |
Timeline |
Zhejiang Construction |
Kunshan Guoli Electronic |
Zhejiang Construction and Kunshan Guoli Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Zhejiang Construction and Kunshan Guoli
The main advantage of trading using opposite Zhejiang Construction and Kunshan Guoli positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Zhejiang Construction position performs unexpectedly, Kunshan Guoli 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 Kunshan Guoli will offset losses from the drop in Kunshan Guoli's long position.Zhejiang Construction vs. Chengdu Spaceon Electronics | Zhejiang Construction vs. Anhui Gujing Distillery | Zhejiang Construction vs. Western Metal Materials | Zhejiang Construction vs. China Asset Management |
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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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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