Correlation Between Concord Securities and China Bills

Can any of the company-specific risk be diversified away by investing in both Concord Securities and China Bills 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 Concord Securities and China Bills into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Concord Securities Co and China Bills Finance, you can compare the effects of market volatilities on Concord Securities and China Bills 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 Concord Securities with a short position of China Bills. Check out your portfolio center. Please also check ongoing floating volatility patterns of Concord Securities and China Bills.

Diversification Opportunities for Concord Securities and China Bills

-0.26

Correlation Coefficient

Concord Securities  China Bills

Very good diversification

The 3 months correlation between Concord and China is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Concord Securities Co and China Bills Finance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Bills Finance and Concord Securities 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 Concord Securities Co are associated (or correlated) with China Bills. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Bills Finance has no effect on the direction of Concord Securities i.e., Concord Securities and China Bills go up and down completely randomly.

Pair Corralation between Concord Securities and China Bills

Assuming the 90 days trading horizon Concord Securities Co is expected to under-perform the China Bills. In addition to that, Concord Securities is 1.37 times more volatile than China Bills Finance. It trades about -0.25 of its total potential returns per unit of risk. China Bills Finance is currently generating about 0.15 per unit of volatility. If you would invest  1,505  in China Bills Finance on September 18, 2024 and sell it today you would earn a total of  20.00  from holding China Bills Finance or generate 1.33% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.45%
Values	Daily Returns

Concord Securities Co  vs.  China Bills Finance

Concord Securities

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Concord Securities Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Concord Securities is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

China Bills Finance

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in China Bills Finance are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, China Bills is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Concord Securities and China Bills

The main advantage of trading using opposite Concord Securities and China Bills positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Concord Securities position performs unexpectedly, China Bills 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 Bills will offset losses from the drop in China Bills' long position.

The idea behind Concord Securities Co and China Bills Finance 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.

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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 Commodity Directory module to find actively traded commodities issued by global exchanges.