Correlation Between Chongqing Changan and Guangdong Silvere
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By analyzing existing cross correlation between Chongqing Changan Automobile and Guangdong Silvere Sci, you can compare the effects of market volatilities on Chongqing Changan and Guangdong Silvere 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 Guangdong Silvere. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chongqing Changan and Guangdong Silvere.
Diversification Opportunities for Chongqing Changan and Guangdong Silvere
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Chongqing and Guangdong is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Chongqing Changan Automobile and Guangdong Silvere Sci in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guangdong Silvere Sci 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 Guangdong Silvere. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guangdong Silvere Sci has no effect on the direction of Chongqing Changan i.e., Chongqing Changan and Guangdong Silvere go up and down completely randomly.
Pair Corralation between Chongqing Changan and Guangdong Silvere
Assuming the 90 days trading horizon Chongqing Changan Automobile is expected to under-perform the Guangdong Silvere. But the stock apears to be less risky and, when comparing its historical volatility, Chongqing Changan Automobile is 1.94 times less risky than Guangdong Silvere. The stock trades about -0.05 of its potential returns per unit of risk. The Guangdong Silvere Sci is currently generating about 0.48 of returns per unit of risk over similar time horizon. If you would invest 533.00 in Guangdong Silvere Sci on November 7, 2024 and sell it today you would earn a total of 115.00 from holding Guangdong Silvere Sci or generate 21.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Chongqing Changan Automobile vs. Guangdong Silvere Sci
Performance |
| Timeline |
| Chongqing Changan |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Guangdong Silvere Sci |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Chongqing Changan and Guangdong Silvere Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chongqing Changan and Guangdong Silvere
The main advantage of trading using opposite Chongqing Changan and Guangdong Silvere positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chongqing Changan position performs unexpectedly, Guangdong Silvere 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 Guangdong Silvere will offset losses from the drop in Guangdong Silvere's long position.The idea behind Chongqing Changan Automobile and Guangdong Silvere Sci 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.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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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