Correlation Between ADAMA and Changchun Faway
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By analyzing existing cross correlation between ADAMA and Changchun Faway Automobile, you can compare the effects of market volatilities on ADAMA and Changchun Faway 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 ADAMA with a short position of Changchun Faway. Check out your portfolio center. Please also check ongoing floating volatility patterns of ADAMA and Changchun Faway.
Diversification Opportunities for ADAMA and Changchun Faway
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between ADAMA and Changchun is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding ADAMA and Changchun Faway Automobile in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Changchun Faway Auto and ADAMA 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 ADAMA are associated (or correlated) with Changchun Faway. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Changchun Faway Auto has no effect on the direction of ADAMA i.e., ADAMA and Changchun Faway go up and down completely randomly.
Pair Corralation between ADAMA and Changchun Faway
Assuming the 90 days trading horizon ADAMA is expected to under-perform the Changchun Faway. In addition to that, ADAMA is 1.1 times more volatile than Changchun Faway Automobile. It trades about -0.02 of its total potential returns per unit of risk. Changchun Faway Automobile is currently generating about 0.02 per unit of volatility. If you would invest 859.00 in Changchun Faway Automobile on September 3, 2024 and sell it today you would earn a total of 84.00 from holding Changchun Faway Automobile or generate 9.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
ADAMA vs. Changchun Faway Automobile
Performance |
| Timeline |
| ADAMA |
| Changchun Faway Auto |
ADAMA and Changchun Faway Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ADAMA and Changchun Faway
The main advantage of trading using opposite ADAMA and Changchun Faway positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ADAMA position performs unexpectedly, Changchun Faway 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 Changchun Faway will offset losses from the drop in Changchun Faway's long position.| ADAMA vs. Quectel Wireless Solutions | ADAMA vs. Zhejiang Yayi Metal | ADAMA vs. Zhejiang Publishing Media | ADAMA vs. Ye Chiu Metal |
| Changchun Faway vs. PetroChina Co Ltd | Changchun Faway vs. China Mobile Limited | Changchun Faway vs. Industrial and Commercial | Changchun Faway vs. China Life Insurance |
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 Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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