Correlation Between Dazhong Transportation and China Citic
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By analyzing existing cross correlation between Dazhong Transportation Group and China Citic Bank, you can compare the effects of market volatilities on Dazhong Transportation and China Citic 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 Dazhong Transportation with a short position of China Citic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dazhong Transportation and China Citic.
Diversification Opportunities for Dazhong Transportation and China Citic
0.39 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Dazhong and China is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Dazhong Transportation Group and China Citic Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Citic Bank and Dazhong Transportation 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 Dazhong Transportation Group are associated (or correlated) with China Citic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Citic Bank has no effect on the direction of Dazhong Transportation i.e., Dazhong Transportation and China Citic go up and down completely randomly.
Pair Corralation between Dazhong Transportation and China Citic
Assuming the 90 days trading horizon Dazhong Transportation is expected to generate 44.73 times less return on investment than China Citic. But when comparing it to its historical volatility, Dazhong Transportation Group is 1.03 times less risky than China Citic. It trades about 0.01 of its potential returns per unit of risk. China Citic Bank is currently generating about 0.28 of returns per unit of risk over similar time horizon. If you would invest 647.00 in China Citic Bank on December 10, 2024 and sell it today you would earn a total of 53.00 from holding China Citic Bank or generate 8.19% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Dazhong Transportation Group vs. China Citic Bank
Performance |
Timeline |
Dazhong Transportation |
China Citic Bank |
Dazhong Transportation and China Citic Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Dazhong Transportation and China Citic
The main advantage of trading using opposite Dazhong Transportation and China Citic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dazhong Transportation position performs unexpectedly, China Citic 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 Citic will offset losses from the drop in China Citic's long position.The idea behind Dazhong Transportation Group and China Citic Bank 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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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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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