Correlation Between Beijing Mainstreets and Chongqing Changan
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By analyzing existing cross correlation between Beijing Mainstreets Investment and Chongqing Changan Automobile, you can compare the effects of market volatilities on Beijing Mainstreets and Chongqing Changan 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 Beijing Mainstreets with a short position of Chongqing Changan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Beijing Mainstreets and Chongqing Changan.
Diversification Opportunities for Beijing Mainstreets and Chongqing Changan
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Beijing and Chongqing is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Beijing Mainstreets Investment and Chongqing Changan Automobile in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chongqing Changan and Beijing Mainstreets 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 Beijing Mainstreets Investment are associated (or correlated) with Chongqing Changan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chongqing Changan has no effect on the direction of Beijing Mainstreets i.e., Beijing Mainstreets and Chongqing Changan go up and down completely randomly.
Pair Corralation between Beijing Mainstreets and Chongqing Changan
Assuming the 90 days trading horizon Beijing Mainstreets Investment is expected to generate 1.33 times more return on investment than Chongqing Changan. However, Beijing Mainstreets is 1.33 times more volatile than Chongqing Changan Automobile. It trades about 0.14 of its potential returns per unit of risk. Chongqing Changan Automobile is currently generating about 0.02 per unit of risk. If you would invest 148.00 in Beijing Mainstreets Investment on September 1, 2024 and sell it today you would earn a total of 104.00 from holding Beijing Mainstreets Investment or generate 70.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Beijing Mainstreets Investment vs. Chongqing Changan Automobile
Performance |
| Timeline |
| Beijing Mainstreets |
| Chongqing Changan |
Beijing Mainstreets and Chongqing Changan Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Beijing Mainstreets and Chongqing Changan
The main advantage of trading using opposite Beijing Mainstreets and Chongqing Changan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Beijing Mainstreets position performs unexpectedly, Chongqing Changan 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 Chongqing Changan will offset losses from the drop in Chongqing Changan's long position.| Beijing Mainstreets vs. BeiGene | Beijing Mainstreets vs. Kweichow Moutai Co | Beijing Mainstreets vs. Beijing Roborock Technology | Beijing Mainstreets vs. G bits Network Technology |
| Chongqing Changan vs. Biwin Storage Technology | Chongqing Changan vs. PetroChina Co Ltd | Chongqing Changan vs. Industrial and Commercial | Chongqing Changan vs. China Construction Bank |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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