Correlation Between China National and Wienerberger Baustoffindustri

Can any of the company-specific risk be diversified away by investing in both China National and Wienerberger Baustoffindustri at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining China National and Wienerberger Baustoffindustri into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between China National Building and Wienerberger Baustoffindustrie, you can compare the effects of market volatilities on China National and Wienerberger Baustoffindustri 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 National with a short position of Wienerberger Baustoffindustri. Check out your portfolio center. Please also check ongoing floating volatility patterns of China National and Wienerberger Baustoffindustri.

Diversification Opportunities for China National and Wienerberger Baustoffindustri

-0.59

Correlation Coefficient

China National  Wienerberger Baustoffindustri

Excellent diversification

The 3 months correlation between China and Wienerberger is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding China National Building and Wienerberger Baustoffindustrie in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wienerberger Baustoffindustri and China National 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 National Building are associated (or correlated) with Wienerberger Baustoffindustri. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wienerberger Baustoffindustri has no effect on the direction of China National i.e., China National and Wienerberger Baustoffindustri go up and down completely randomly.

Pair Corralation between China National and Wienerberger Baustoffindustri

Assuming the 90 days horizon China National Building is expected to generate 1.96 times more return on investment than Wienerberger Baustoffindustri. However, China National is 1.96 times more volatile than Wienerberger Baustoffindustrie. It trades about 0.17 of its potential returns per unit of risk. Wienerberger Baustoffindustrie is currently generating about -0.05 per unit of risk. If you would invest  1,455  in China National Building on September 5, 2024 and sell it today you would earn a total of  950.00  from holding China National Building or generate 65.29% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

China National Building  vs.  Wienerberger Baustoffindustrie

China National Building

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in China National Building are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile primary indicators, China National showed solid returns over the last few months and may actually be approaching a breakup point.

Wienerberger Baustoffindustri

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Wienerberger Baustoffindustrie has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's fundamental drivers remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with China National and Wienerberger Baustoffindustri

The main advantage of trading using opposite China National and Wienerberger Baustoffindustri positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China National position performs unexpectedly, Wienerberger Baustoffindustri 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 Wienerberger Baustoffindustri will offset losses from the drop in Wienerberger Baustoffindustri's long position.

The idea behind China National Building and Wienerberger Baustoffindustrie 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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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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.