Correlation Between Chengdu Kanghua and China Railway
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By analyzing existing cross correlation between Chengdu Kanghua Biological and China Railway Construction, you can compare the effects of market volatilities on Chengdu Kanghua 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 Chengdu Kanghua with a short position of China Railway. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chengdu Kanghua and China Railway.
Diversification Opportunities for Chengdu Kanghua and China Railway
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Chengdu and China is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Chengdu Kanghua Biological 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 Chengdu Kanghua 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 Chengdu Kanghua Biological 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 Chengdu Kanghua i.e., Chengdu Kanghua and China Railway go up and down completely randomly.
Pair Corralation between Chengdu Kanghua and China Railway
Assuming the 90 days trading horizon Chengdu Kanghua is expected to generate 1.46 times less return on investment than China Railway. In addition to that, Chengdu Kanghua is 1.67 times more volatile than China Railway Construction. It trades about 0.09 of its total potential returns per unit of risk. China Railway Construction is currently generating about 0.22 per unit of volatility. If you would invest 342.00 in China Railway Construction on September 6, 2024 and sell it today you would earn a total of 143.00 from holding China Railway Construction or generate 41.81% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Chengdu Kanghua Biological vs. China Railway Construction
Performance |
Timeline |
Chengdu Kanghua Biol |
China Railway Constr |
Chengdu Kanghua and China Railway Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Chengdu Kanghua and China Railway
The main advantage of trading using opposite Chengdu Kanghua and China Railway positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chengdu Kanghua 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.Chengdu Kanghua vs. Dongjiang Environmental Co | Chengdu Kanghua vs. Sinocat Environmental Technology | Chengdu Kanghua vs. Qingdao Foods Co | Chengdu Kanghua vs. Marssenger Kitchenware Co |
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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 Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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