Correlation Between Chongqing Changan and Huafa Industrial
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By analyzing existing cross correlation between Chongqing Changan Automobile and Huafa Industrial Co, you can compare the effects of market volatilities on Chongqing Changan and Huafa Industrial 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 Huafa Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chongqing Changan and Huafa Industrial.
Diversification Opportunities for Chongqing Changan and Huafa Industrial
0.48 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Chongqing and Huafa is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Chongqing Changan Automobile and Huafa Industrial Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Huafa Industrial 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 Huafa Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Huafa Industrial has no effect on the direction of Chongqing Changan i.e., Chongqing Changan and Huafa Industrial go up and down completely randomly.
Pair Corralation between Chongqing Changan and Huafa Industrial
Assuming the 90 days trading horizon Chongqing Changan Automobile is expected to generate 1.08 times more return on investment than Huafa Industrial. However, Chongqing Changan is 1.08 times more volatile than Huafa Industrial Co. It trades about 0.01 of its potential returns per unit of risk. Huafa Industrial Co is currently generating about -0.03 per unit of risk. If you would invest 1,340 in Chongqing Changan Automobile on October 16, 2024 and sell it today you would lose (57.00) from holding Chongqing Changan Automobile or give up 4.25% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Chongqing Changan Automobile vs. Huafa Industrial Co
Performance |
| Timeline |
| Chongqing Changan |
| Huafa Industrial |
Chongqing Changan and Huafa Industrial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chongqing Changan and Huafa Industrial
The main advantage of trading using opposite Chongqing Changan and Huafa Industrial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chongqing Changan position performs unexpectedly, Huafa Industrial 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 Huafa Industrial will offset losses from the drop in Huafa Industrial's long position.| Chongqing Changan vs. Wonders Information | Chongqing Changan vs. AVCON Information Tech | Chongqing Changan vs. Emdoor Information Co | Chongqing Changan vs. Sichuan Hebang Biotechnology |
| Huafa Industrial vs. Ningbo Fujia Industrial | Huafa Industrial vs. Universal Scientific Industrial | Huafa Industrial vs. Dezhan HealthCare Co | Huafa Industrial vs. Healthcare Co |
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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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