Correlation Between Amada and China Construction
Can any of the company-specific risk be diversified away by investing in both Amada and China Construction 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 Amada and China Construction into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Amada Co and China Construction Bank, you can compare the effects of market volatilities on Amada and China Construction 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 Amada with a short position of China Construction. Check out your portfolio center. Please also check ongoing floating volatility patterns of Amada and China Construction.
Diversification Opportunities for Amada and China Construction
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Amada and China is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Amada Co and China Construction Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Construction Bank and Amada 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 Amada Co are associated (or correlated) with China Construction. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Construction Bank has no effect on the direction of Amada i.e., Amada and China Construction go up and down completely randomly.
Pair Corralation between Amada and China Construction
If you would invest 61.00 in China Construction Bank on January 26, 2024 and sell it today you would lose (0.14) from holding China Construction Bank or give up 0.23% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 0.0% |
| Values | Daily Returns |
Amada Co vs. China Construction Bank
Performance |
| Timeline |
| Amada |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| China Construction Bank |
Amada and China Construction Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Amada and China Construction
The main advantage of trading using opposite Amada and China Construction positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Amada position performs unexpectedly, China Construction 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 Construction will offset losses from the drop in China Construction's long position.The idea behind Amada Co and China Construction 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.| China Construction vs. ANZ Group Holdings | China Construction vs. National Australia Bank | China Construction vs. Bank of America | China Construction vs. Bank of America |
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 Correlations module to find global opportunities by holding instruments from different markets.
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