Correlation Between CEMATRIX and China National

Can any of the company-specific risk be diversified away by investing in both CEMATRIX and China National 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 CEMATRIX and China National into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for CEMATRIX and China National

-0.24

Correlation Coefficient

CEMATRIX  China National

Very good diversification

The 3 months correlation between CEMATRIX and China is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding CEMATRIX and China National Building in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China National Building and CEMATRIX 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 CEMATRIX are associated (or correlated) with China National. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China National Building has no effect on the direction of CEMATRIX i.e., CEMATRIX and China National go up and down completely randomly.

Pair Corralation between CEMATRIX and China National

Assuming the 90 days horizon CEMATRIX is expected to under-perform the China National. But the otc stock apears to be less risky and, when comparing its historical volatility, CEMATRIX is 1.15 times less risky than China National. The otc stock trades about -0.03 of its potential returns per unit of risk. The China National Building is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  1,769  in China National Building on September 30, 2024 and sell it today you would earn a total of  561.00  from holding China National Building or generate 31.71% return on investment over 90 days.

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

CEMATRIX  vs.  China National Building

CEMATRIX

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CEMATRIX has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

China National Building

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in China National Building are ranked lower than 8 (%) 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.

Pair Trading with CEMATRIX and China National

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

The idea behind CEMATRIX and China National Building 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.