Correlation Between China Securities and Basic Materials
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By analyzing existing cross correlation between China Securities 800 and Basic Materials, you can compare the effects of market volatilities on China Securities and Basic Materials 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 Securities with a short position of Basic Materials. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Securities and Basic Materials.
Diversification Opportunities for China Securities and Basic Materials
0.34 | Correlation Coefficient |
Weak diversification
The 3 months correlation between China and Basic is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding China Securities 800 and Basic Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Basic Materials and China Securities 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 Securities 800 are associated (or correlated) with Basic Materials. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Basic Materials has no effect on the direction of China Securities i.e., China Securities and Basic Materials go up and down completely randomly.
Pair Corralation between China Securities and Basic Materials
Assuming the 90 days trading horizon China Securities 800 is expected to generate 0.97 times more return on investment than Basic Materials. However, China Securities 800 is 1.03 times less risky than Basic Materials. It trades about 0.05 of its potential returns per unit of risk. Basic Materials is currently generating about -0.21 per unit of risk. If you would invest 389,356 in China Securities 800 on January 30, 2024 and sell it today you would earn a total of 3,815 from holding China Securities 800 or generate 0.98% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 95.24% |
Values | Daily Returns |
China Securities 800 vs. Basic Materials
Performance |
Timeline |
China Securities and Basic Materials Volatility Contrast
Predicted Return Density |
Returns |
China Securities 800
Pair trading matchups for China Securities
Basic Materials
Pair trading matchups for Basic Materials
Pair Trading with China Securities and Basic Materials
The main advantage of trading using opposite China Securities and Basic Materials positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Securities position performs unexpectedly, Basic Materials 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 Basic Materials will offset losses from the drop in Basic Materials' long position.China Securities vs. Guangzhou Automobile Group | China Securities vs. Shaanxi Meineng Clean | China Securities vs. Xiangyang Automobile Bearing | China Securities vs. Huaibei Mining Holdings |
Basic Materials vs. SVB Financial Group | Basic Materials vs. HDFC Bank Limited | Basic Materials vs. Verizon Communications | Basic Materials vs. Mitsubishi UFJ Financial |
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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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