Correlation Between Chengdu Xingrong and Changshu Ruite
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By analyzing existing cross correlation between Chengdu Xingrong Investment and Changshu Ruite Electric, you can compare the effects of market volatilities on Chengdu Xingrong and Changshu Ruite 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 Changshu Ruite. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chengdu Xingrong and Changshu Ruite.
Diversification Opportunities for Chengdu Xingrong and Changshu Ruite
0.45 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Chengdu and Changshu is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Chengdu Xingrong Investment and Changshu Ruite Electric in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Changshu Ruite Electric 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 Changshu Ruite. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Changshu Ruite Electric has no effect on the direction of Chengdu Xingrong i.e., Chengdu Xingrong and Changshu Ruite go up and down completely randomly.
Pair Corralation between Chengdu Xingrong and Changshu Ruite
Assuming the 90 days trading horizon Chengdu Xingrong Investment is expected to under-perform the Changshu Ruite. But the stock apears to be less risky and, when comparing its historical volatility, Chengdu Xingrong Investment is 1.24 times less risky than Changshu Ruite. The stock trades about -0.01 of its potential returns per unit of risk. The Changshu Ruite Electric is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest 703.00 in Changshu Ruite Electric on November 8, 2024 and sell it today you would lose (1.00) from holding Changshu Ruite Electric or give up 0.14% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Chengdu Xingrong Investment vs. Changshu Ruite Electric
Performance |
| Timeline |
| Chengdu Xingrong Inv |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Changshu Ruite Electric |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Chengdu Xingrong and Changshu Ruite Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chengdu Xingrong and Changshu Ruite
The main advantage of trading using opposite Chengdu Xingrong and Changshu Ruite positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chengdu Xingrong position performs unexpectedly, Changshu Ruite 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 Changshu Ruite will offset losses from the drop in Changshu Ruite's long position.The idea behind Chengdu Xingrong Investment and Changshu Ruite Electric 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.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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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