Correlation Between Federal Agricultural and China Construction
Can any of the company-specific risk be diversified away by investing in both Federal Agricultural 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 Federal Agricultural and China Construction into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Federal Agricultural Mortgage and China Construction Bank, you can compare the effects of market volatilities on Federal Agricultural 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 Federal Agricultural with a short position of China Construction. Check out your portfolio center. Please also check ongoing floating volatility patterns of Federal Agricultural and China Construction.
Diversification Opportunities for Federal Agricultural and China Construction
0.09 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Federal and China is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Federal Agricultural Mortgage 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 Federal Agricultural 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 Federal Agricultural Mortgage 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 Federal Agricultural i.e., Federal Agricultural and China Construction go up and down completely randomly.
Pair Corralation between Federal Agricultural and China Construction
Considering the 90-day investment horizon Federal Agricultural Mortgage is expected to under-perform the China Construction. But the stock apears to be less risky and, when comparing its historical volatility, Federal Agricultural Mortgage is 2.19 times less risky than China Construction. The stock trades about -0.09 of its potential returns per unit of risk. The China Construction Bank is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 100.00 in China Construction Bank on September 10, 2025 and sell it today you would earn a total of 1.00 from holding China Construction Bank or generate 1.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Federal Agricultural Mortgage vs. China Construction Bank
Performance |
| Timeline |
| Federal Agricultural |
| China Construction Bank |
Federal Agricultural and China Construction Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Federal Agricultural and China Construction
The main advantage of trading using opposite Federal Agricultural and China Construction positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Federal Agricultural 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.| Federal Agricultural vs. FinVolution Group | Federal Agricultural vs. 360 Finance | Federal Agricultural vs. OFG Bancorp | Federal Agricultural vs. City Holding |
| China Construction vs. Svenska Handelsbanken PK | China Construction vs. Industrial and Commercial | 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 AI Portfolio Prophet module to use AI to generate optimal portfolios and find profitable investment opportunities.
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