Correlation Between Chongqing Changan and Beijing Ultrapower
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By analyzing existing cross correlation between Chongqing Changan Automobile and Beijing Ultrapower Software, you can compare the effects of market volatilities on Chongqing Changan and Beijing Ultrapower 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 Beijing Ultrapower. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chongqing Changan and Beijing Ultrapower.
Diversification Opportunities for Chongqing Changan and Beijing Ultrapower
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Chongqing and Beijing is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Chongqing Changan Automobile and Beijing Ultrapower Software in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Beijing Ultrapower 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 Beijing Ultrapower. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Beijing Ultrapower has no effect on the direction of Chongqing Changan i.e., Chongqing Changan and Beijing Ultrapower go up and down completely randomly.
Pair Corralation between Chongqing Changan and Beijing Ultrapower
Assuming the 90 days trading horizon Chongqing Changan is expected to generate 12.66 times less return on investment than Beijing Ultrapower. But when comparing it to its historical volatility, Chongqing Changan Automobile is 1.56 times less risky than Beijing Ultrapower. It trades about 0.01 of its potential returns per unit of risk. Beijing Ultrapower Software is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 492.00 in Beijing Ultrapower Software on October 16, 2024 and sell it today you would earn a total of 626.00 from holding Beijing Ultrapower Software or generate 127.24% 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. Beijing Ultrapower Software
Performance |
| Timeline |
| Chongqing Changan |
| Beijing Ultrapower |
Chongqing Changan and Beijing Ultrapower Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chongqing Changan and Beijing Ultrapower
The main advantage of trading using opposite Chongqing Changan and Beijing Ultrapower positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chongqing Changan position performs unexpectedly, Beijing Ultrapower 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 Beijing Ultrapower will offset losses from the drop in Beijing Ultrapower's long position.| Chongqing Changan vs. Shenzhen Glory Medical | Chongqing Changan vs. Beijing Bewinner Communications | Chongqing Changan vs. Zhonghong Pulin Medical | Chongqing Changan vs. Guangdong Transtek Medical |
| Beijing Ultrapower vs. StarPower Semiconductor | Beijing Ultrapower vs. Thinkon Semiconductor Jinzhou | Beijing Ultrapower vs. Puya Semiconductor Shanghai | Beijing Ultrapower vs. Chongqing Changan Automobile |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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