Correlation Between Chongqing Changan and Zhejiang Qianjiang
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By analyzing existing cross correlation between Chongqing Changan Automobile and Zhejiang Qianjiang Motorcycle, you can compare the effects of market volatilities on Chongqing Changan and Zhejiang Qianjiang 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 Zhejiang Qianjiang. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chongqing Changan and Zhejiang Qianjiang.
Diversification Opportunities for Chongqing Changan and Zhejiang Qianjiang
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Chongqing and Zhejiang is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Chongqing Changan Automobile and Zhejiang Qianjiang Motorcycle in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zhejiang Qianjiang 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 Zhejiang Qianjiang. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zhejiang Qianjiang has no effect on the direction of Chongqing Changan i.e., Chongqing Changan and Zhejiang Qianjiang go up and down completely randomly.
Pair Corralation between Chongqing Changan and Zhejiang Qianjiang
Assuming the 90 days trading horizon Chongqing Changan Automobile is expected to under-perform the Zhejiang Qianjiang. But the stock apears to be less risky and, when comparing its historical volatility, Chongqing Changan Automobile is 1.18 times less risky than Zhejiang Qianjiang. The stock trades about -0.03 of its potential returns per unit of risk. The Zhejiang Qianjiang Motorcycle is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 1,247 in Zhejiang Qianjiang Motorcycle on September 2, 2024 and sell it today you would earn a total of 402.00 from holding Zhejiang Qianjiang Motorcycle or generate 32.24% 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. Zhejiang Qianjiang Motorcycle
Performance |
| Timeline |
| Chongqing Changan |
| Zhejiang Qianjiang |
Chongqing Changan and Zhejiang Qianjiang Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chongqing Changan and Zhejiang Qianjiang
The main advantage of trading using opposite Chongqing Changan and Zhejiang Qianjiang positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chongqing Changan position performs unexpectedly, Zhejiang Qianjiang 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 Zhejiang Qianjiang will offset losses from the drop in Zhejiang Qianjiang'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 |
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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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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