Correlation Between Chengdu Xingrong and Hangzhou Weiguang
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By analyzing existing cross correlation between Chengdu Xingrong Investment and Hangzhou Weiguang Electronic, you can compare the effects of market volatilities on Chengdu Xingrong and Hangzhou Weiguang 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 Chengdu Xingrong with a short position of Hangzhou Weiguang. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chengdu Xingrong and Hangzhou Weiguang.
Diversification Opportunities for Chengdu Xingrong and Hangzhou Weiguang
0.27 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Chengdu and Hangzhou is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Chengdu Xingrong Investment and Hangzhou Weiguang Electronic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hangzhou Weiguang and Chengdu Xingrong 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 Chengdu Xingrong Investment are associated (or correlated) with Hangzhou Weiguang. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hangzhou Weiguang has no effect on the direction of Chengdu Xingrong i.e., Chengdu Xingrong and Hangzhou Weiguang go up and down completely randomly.
Pair Corralation between Chengdu Xingrong and Hangzhou Weiguang
Assuming the 90 days trading horizon Chengdu Xingrong Investment is expected to under-perform the Hangzhou Weiguang. But the stock apears to be less risky and, when comparing its historical volatility, Chengdu Xingrong Investment is 1.24 times less risky than Hangzhou Weiguang. The stock trades about -0.18 of its potential returns per unit of risk. The Hangzhou Weiguang Electronic is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 2,131 in Hangzhou Weiguang Electronic on August 29, 2024 and sell it today you would earn a total of 103.00 from holding Hangzhou Weiguang Electronic or generate 4.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Chengdu Xingrong Investment vs. Hangzhou Weiguang Electronic
Performance |
| Timeline |
| Chengdu Xingrong Inv |
| Hangzhou Weiguang |
Chengdu Xingrong and Hangzhou Weiguang Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chengdu Xingrong and Hangzhou Weiguang
The main advantage of trading using opposite Chengdu Xingrong and Hangzhou Weiguang positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chengdu Xingrong position performs unexpectedly, Hangzhou Weiguang 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 Hangzhou Weiguang will offset losses from the drop in Hangzhou Weiguang's long position.| Chengdu Xingrong vs. Hangzhou Weiguang Electronic | Chengdu Xingrong vs. Hefei Metalforming Mach | Chengdu Xingrong vs. Guocheng Mining Co | Chengdu Xingrong vs. Shanghai Yanpu Metal |
| Hangzhou Weiguang vs. PetroChina Co Ltd | Hangzhou Weiguang vs. China State Construction | Hangzhou Weiguang vs. China Mobile Limited | Hangzhou Weiguang vs. Industrial and Commercial |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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