Correlation Between China Railway and Tokyu Construction

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Can any of the company-specific risk be diversified away by investing in both China Railway and Tokyu Construction 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 China Railway and Tokyu Construction into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between China Railway Construction and Tokyu Construction Co, you can compare the effects of market volatilities on China Railway and Tokyu Construction 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 Tokyu Construction. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Railway and Tokyu Construction.

Diversification Opportunities for China Railway and Tokyu Construction

ChinaTokyuDiversified AwayChinaTokyuDiversified Away100%
0.0
  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between China and Tokyu is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding China Railway Construction and Tokyu Construction Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tokyu Construction 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 Construction are associated (or correlated) with Tokyu Construction. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tokyu Construction has no effect on the direction of China Railway i.e., China Railway and Tokyu Construction go up and down completely randomly.

Pair Corralation between China Railway and Tokyu Construction

If you would invest  412.00  in Tokyu Construction Co on November 18, 2024 and sell it today you would earn a total of  76.00  from holding Tokyu Construction Co or generate 18.45% return on investment over 90 days.
Time Period3 Months [change]
DirectionFlat 
StrengthInsignificant
Accuracy98.36%
ValuesDaily Returns

China Railway Construction  vs.  Tokyu Construction Co

 Performance 
JavaScript chart by amCharts 3.21.15Dec2025Feb 051015
JavaScript chart by amCharts 3.21.154FF TCW
       Timeline  
China Railway Constr 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days China Railway Construction has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, China Railway is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb0.640.645
Tokyu Construction 

Risk-Adjusted Performance

Solid

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Tokyu Construction Co are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Tokyu Construction reported solid returns over the last few months and may actually be approaching a breakup point.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb4.14.24.34.44.54.64.74.8

China Railway and Tokyu Construction Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15 0.050.100.150.200.250.30
JavaScript chart by amCharts 3.21.154FF TCW
       Returns  

Pair Trading with China Railway and Tokyu Construction

The main advantage of trading using opposite China Railway and Tokyu Construction positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Railway position performs unexpectedly, Tokyu Construction 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 Tokyu Construction will offset losses from the drop in Tokyu Construction's long position.
The idea behind China Railway Construction and Tokyu Construction Co pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.

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