Correlation Between Chongqing Changan and Weihai Honglin
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By analyzing existing cross correlation between Chongqing Changan Automobile and Weihai Honglin Electronic, you can compare the effects of market volatilities on Chongqing Changan and Weihai Honglin 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 Weihai Honglin. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chongqing Changan and Weihai Honglin.
Diversification Opportunities for Chongqing Changan and Weihai Honglin
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Chongqing and Weihai is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Chongqing Changan Automobile and Weihai Honglin Electronic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Weihai Honglin Electronic 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 Weihai Honglin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Weihai Honglin Electronic has no effect on the direction of Chongqing Changan i.e., Chongqing Changan and Weihai Honglin go up and down completely randomly.
Pair Corralation between Chongqing Changan and Weihai Honglin
Assuming the 90 days trading horizon Chongqing Changan Automobile is expected to under-perform the Weihai Honglin. But the stock apears to be less risky and, when comparing its historical volatility, Chongqing Changan Automobile is 1.1 times less risky than Weihai Honglin. The stock trades about -0.02 of its potential returns per unit of risk. The Weihai Honglin Electronic is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 1,396 in Weihai Honglin Electronic on September 12, 2024 and sell it today you would earn a total of 5.00 from holding Weihai Honglin Electronic or generate 0.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Chongqing Changan Automobile vs. Weihai Honglin Electronic
Performance |
| Timeline |
| Chongqing Changan |
| Weihai Honglin Electronic |
Chongqing Changan and Weihai Honglin Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chongqing Changan and Weihai Honglin
The main advantage of trading using opposite Chongqing Changan and Weihai Honglin positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chongqing Changan position performs unexpectedly, Weihai Honglin 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 Weihai Honglin will offset losses from the drop in Weihai Honglin's long position.| Chongqing Changan vs. Lutian Machinery Co | Chongqing Changan vs. PetroChina Co Ltd | Chongqing Changan vs. Bank of China | Chongqing Changan vs. Gansu Jiu Steel |
| Weihai Honglin vs. Agricultural Bank of | Weihai Honglin vs. Industrial and Commercial | Weihai Honglin vs. Bank of China | Weihai Honglin vs. PetroChina Co Ltd |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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