Correlation Between China Construction and Kangping Technology
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By analyzing existing cross correlation between China Construction Bank and Kangping Technology Co, you can compare the effects of market volatilities on China Construction and Kangping Technology 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 Construction with a short position of Kangping Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Construction and Kangping Technology.
Diversification Opportunities for China Construction and Kangping Technology
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between China and Kangping is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding China Construction Bank and Kangping Technology Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kangping Technology and China Construction 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 Construction Bank are associated (or correlated) with Kangping Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kangping Technology has no effect on the direction of China Construction i.e., China Construction and Kangping Technology go up and down completely randomly.
Pair Corralation between China Construction and Kangping Technology
Assuming the 90 days trading horizon China Construction is expected to generate 2.3 times less return on investment than Kangping Technology. But when comparing it to its historical volatility, China Construction Bank is 2.08 times less risky than Kangping Technology. It trades about 0.16 of its potential returns per unit of risk. Kangping Technology Co is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest 1,668 in Kangping Technology Co on September 8, 2024 and sell it today you would earn a total of 648.00 from holding Kangping Technology Co or generate 38.85% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
China Construction Bank vs. Kangping Technology Co
Performance |
Timeline |
China Construction Bank |
Kangping Technology |
China Construction and Kangping Technology Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with China Construction and Kangping Technology
The main advantage of trading using opposite China Construction and Kangping Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Construction position performs unexpectedly, Kangping Technology 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 Kangping Technology will offset losses from the drop in Kangping Technology's long position.China Construction vs. Industrial and Commercial | China Construction vs. Agricultural Bank of | China Construction vs. Bank of China | China Construction vs. Postal Savings Bank |
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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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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