Correlation Between China Life and China Vanke
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By analyzing existing cross correlation between China Life Insurance and China Vanke Co, you can compare the effects of market volatilities on China Life and China Vanke 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 Life with a short position of China Vanke. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Life and China Vanke.
Diversification Opportunities for China Life and China Vanke
0.42 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between China and China is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding China Life Insurance and China Vanke Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Vanke and China Life 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 Life Insurance are associated (or correlated) with China Vanke. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Vanke has no effect on the direction of China Life i.e., China Life and China Vanke go up and down completely randomly.
Pair Corralation between China Life and China Vanke
Assuming the 90 days trading horizon China Life Insurance is expected to under-perform the China Vanke. But the stock apears to be less risky and, when comparing its historical volatility, China Life Insurance is 1.45 times less risky than China Vanke. The stock trades about -0.11 of its potential returns per unit of risk. The China Vanke Co is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest 736.00 in China Vanke Co on December 30, 2024 and sell it today you would lose (24.00) from holding China Vanke Co or give up 3.26% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
China Life Insurance vs. China Vanke Co
Performance |
Timeline |
China Life Insurance |
China Vanke |
China Life and China Vanke Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with China Life and China Vanke
The main advantage of trading using opposite China Life and China Vanke positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Life position performs unexpectedly, China Vanke 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 Vanke will offset losses from the drop in China Vanke's long position.China Life vs. Sinomach Automobile Co | China Life vs. Dingli Communications Corp | China Life vs. Fiberhome Telecommunication Technologies | China Life vs. Jilin Jlu Communication |
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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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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