Correlation Between Chongqing Changan and Rongan Property
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By analyzing existing cross correlation between Chongqing Changan Automobile and Rongan Property Co, you can compare the effects of market volatilities on Chongqing Changan and Rongan Property 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 Chongqing Changan with a short position of Rongan Property. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chongqing Changan and Rongan Property.
Diversification Opportunities for Chongqing Changan and Rongan Property
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Chongqing and Rongan is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Chongqing Changan Automobile and Rongan Property Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rongan Property and Chongqing Changan 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 Chongqing Changan Automobile are associated (or correlated) with Rongan Property. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rongan Property has no effect on the direction of Chongqing Changan i.e., Chongqing Changan and Rongan Property go up and down completely randomly.
Pair Corralation between Chongqing Changan and Rongan Property
Assuming the 90 days trading horizon Chongqing Changan Automobile is expected to generate 0.46 times more return on investment than Rongan Property. However, Chongqing Changan Automobile is 2.16 times less risky than Rongan Property. It trades about -0.06 of its potential returns per unit of risk. Rongan Property Co is currently generating about -0.21 per unit of risk. If you would invest 1,275 in Chongqing Changan Automobile on November 4, 2024 and sell it today you would lose (20.00) from holding Chongqing Changan Automobile or give up 1.57% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Chongqing Changan Automobile vs. Rongan Property Co
Performance |
| Timeline |
| Chongqing Changan |
| Rongan Property |
Chongqing Changan and Rongan Property Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chongqing Changan and Rongan Property
The main advantage of trading using opposite Chongqing Changan and Rongan Property positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chongqing Changan position performs unexpectedly, Rongan Property 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 Rongan Property will offset losses from the drop in Rongan Property's long position.The idea behind Chongqing Changan Automobile and Rongan Property Co 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.
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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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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