Correlation Between Aluminum Corp and China Railway
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By analyzing existing cross correlation between Aluminum Corp of and China Railway Construction, you can compare the effects of market volatilities on Aluminum Corp 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 Aluminum Corp with a short position of China Railway. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aluminum Corp and China Railway.
Diversification Opportunities for Aluminum Corp and China Railway
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Aluminum and China is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Aluminum Corp of 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 Aluminum Corp 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 Aluminum Corp of 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 Aluminum Corp i.e., Aluminum Corp and China Railway go up and down completely randomly.
Pair Corralation between Aluminum Corp and China Railway
Assuming the 90 days trading horizon Aluminum Corp of is expected to under-perform the China Railway. In addition to that, Aluminum Corp is 1.22 times more volatile than China Railway Construction. It trades about -0.14 of its total potential returns per unit of risk. China Railway Construction is currently generating about -0.05 per unit of volatility. If you would invest 494.00 in China Railway Construction on September 6, 2024 and sell it today you would lose (9.00) from holding China Railway Construction or give up 1.82% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Aluminum Corp of vs. China Railway Construction
Performance |
Timeline |
Aluminum Corp |
China Railway Constr |
Aluminum Corp and China Railway Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Aluminum Corp and China Railway
The main advantage of trading using opposite Aluminum Corp and China Railway positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aluminum Corp 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.Aluminum Corp vs. Wanhua Chemical Group | Aluminum Corp vs. Baoshan Iron Steel | Aluminum Corp vs. Rongsheng Petrochemical Co | Aluminum Corp vs. Shandong Gold Mining |
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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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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