Correlation Between Chongqing Changan and Chongqing Zhifei
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By analyzing existing cross correlation between Chongqing Changan Automobile and Chongqing Zhifei Bio, you can compare the effects of market volatilities on Chongqing Changan and Chongqing Zhifei 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 Chongqing Zhifei. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chongqing Changan and Chongqing Zhifei.
Diversification Opportunities for Chongqing Changan and Chongqing Zhifei
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Chongqing and Chongqing is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Chongqing Changan Automobile and Chongqing Zhifei Bio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chongqing Zhifei Bio 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 Chongqing Zhifei. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chongqing Zhifei Bio has no effect on the direction of Chongqing Changan i.e., Chongqing Changan and Chongqing Zhifei go up and down completely randomly.
Pair Corralation between Chongqing Changan and Chongqing Zhifei
Assuming the 90 days trading horizon Chongqing Changan is expected to generate 1.11 times less return on investment than Chongqing Zhifei. But when comparing it to its historical volatility, Chongqing Changan Automobile is 1.02 times less risky than Chongqing Zhifei. It trades about 0.21 of its potential returns per unit of risk. Chongqing Zhifei Bio is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest 2,409 in Chongqing Zhifei Bio on November 28, 2024 and sell it today you would earn a total of 201.00 from holding Chongqing Zhifei Bio or generate 8.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 94.12% |
| Values | Daily Returns |
Chongqing Changan Automobile vs. Chongqing Zhifei Bio
Performance |
| Timeline |
| Chongqing Changan |
| Chongqing Zhifei Bio |
Chongqing Changan and Chongqing Zhifei Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chongqing Changan and Chongqing Zhifei
The main advantage of trading using opposite Chongqing Changan and Chongqing Zhifei positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chongqing Changan position performs unexpectedly, Chongqing Zhifei 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 Zhifei will offset losses from the drop in Chongqing Zhifei's long position.| Chongqing Changan vs. Guangdong Qunxing Toys | Chongqing Changan vs. Ningxia Younglight Chemicals | Chongqing Changan vs. Hubei Xingfa Chemicals | Chongqing Changan vs. Nanjing Vishee Medical |
| Chongqing Zhifei vs. Shenzhen Kexin Communication | Chongqing Zhifei vs. Nuode Investment Co | Chongqing Zhifei vs. Zhejiang Construction Investment | Chongqing Zhifei vs. CICT Mobile Communication |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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