Correlation Between Chongqing Changan and ChengDu Hi-Tech
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By analyzing existing cross correlation between Chongqing Changan Automobile and ChengDu Hi Tech Development, you can compare the effects of market volatilities on Chongqing Changan and ChengDu Hi-Tech 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 ChengDu Hi-Tech. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chongqing Changan and ChengDu Hi-Tech.
Diversification Opportunities for Chongqing Changan and ChengDu Hi-Tech
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Chongqing and ChengDu is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Chongqing Changan Automobile and ChengDu Hi Tech Development in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ChengDu Hi Tech 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 ChengDu Hi-Tech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ChengDu Hi Tech has no effect on the direction of Chongqing Changan i.e., Chongqing Changan and ChengDu Hi-Tech go up and down completely randomly.
Pair Corralation between Chongqing Changan and ChengDu Hi-Tech
Assuming the 90 days trading horizon Chongqing Changan is expected to generate 5.08 times less return on investment than ChengDu Hi-Tech. But when comparing it to its historical volatility, Chongqing Changan Automobile is 1.53 times less risky than ChengDu Hi-Tech. It trades about 0.02 of its potential returns per unit of risk. ChengDu Hi Tech Development is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 4,701 in ChengDu Hi Tech Development on September 1, 2024 and sell it today you would earn a total of 1,201 from holding ChengDu Hi Tech Development or generate 25.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Chongqing Changan Automobile vs. ChengDu Hi Tech Development
Performance |
| Timeline |
| Chongqing Changan |
| ChengDu Hi Tech |
Chongqing Changan and ChengDu Hi-Tech Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chongqing Changan and ChengDu Hi-Tech
The main advantage of trading using opposite Chongqing Changan and ChengDu Hi-Tech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chongqing Changan position performs unexpectedly, ChengDu Hi-Tech 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 ChengDu Hi-Tech will offset losses from the drop in ChengDu Hi-Tech's long position.| Chongqing Changan vs. Biwin Storage Technology | Chongqing Changan vs. PetroChina Co Ltd | Chongqing Changan vs. Industrial and Commercial | Chongqing Changan vs. China Construction Bank |
| ChengDu Hi-Tech vs. BeiGene | ChengDu Hi-Tech vs. Kweichow Moutai Co | ChengDu Hi-Tech vs. Beijing Roborock Technology | ChengDu Hi-Tech vs. G bits Network Technology |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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