Correlation Between China Railway and Road Environment
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By analyzing existing cross correlation between China Railway Construction and Road Environment Technology, you can compare the effects of market volatilities on China Railway and Road Environment 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 Road Environment. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Railway and Road Environment.
Diversification Opportunities for China Railway and Road Environment
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between China and Road is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding China Railway Construction and Road Environment Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Road Environment Tec 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 Road Environment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Road Environment Tec has no effect on the direction of China Railway i.e., China Railway and Road Environment go up and down completely randomly.
Pair Corralation between China Railway and Road Environment
Assuming the 90 days trading horizon China Railway Construction is expected to under-perform the Road Environment. But the stock apears to be less risky and, when comparing its historical volatility, China Railway Construction is 2.21 times less risky than Road Environment. The stock trades about -0.19 of its potential returns per unit of risk. The Road Environment Technology is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 1,304 in Road Environment Technology on September 25, 2024 and sell it today you would earn a total of 70.00 from holding Road Environment Technology or generate 5.37% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Strong |
Accuracy | 100.0% |
Values | Daily Returns |
China Railway Construction vs. Road Environment Technology
Performance |
Timeline |
China Railway Constr |
Road Environment Tec |
China Railway and Road Environment Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with China Railway and Road Environment
The main advantage of trading using opposite China Railway and Road Environment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Railway position performs unexpectedly, Road Environment 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 Road Environment will offset losses from the drop in Road Environment's long position.China Railway vs. Bank of China | China Railway vs. Kweichow Moutai Co | China Railway vs. PetroChina Co Ltd | China Railway vs. Bank of Communications |
Road Environment vs. Sportsoul Co Ltd | Road Environment vs. Lander Sports Development | Road Environment vs. Shanghai Construction Group | Road Environment vs. China Railway Construction |
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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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