Correlation Between Chongqing Changan and Shanghai Shibei
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By analyzing existing cross correlation between Chongqing Changan Automobile and Shanghai Shibei Hi Tech, you can compare the effects of market volatilities on Chongqing Changan and Shanghai Shibei 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 Shanghai Shibei. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chongqing Changan and Shanghai Shibei.
Diversification Opportunities for Chongqing Changan and Shanghai Shibei
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Chongqing and Shanghai is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Chongqing Changan Automobile and Shanghai Shibei Hi Tech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shanghai Shibei Hi 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 Shanghai Shibei. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shanghai Shibei Hi has no effect on the direction of Chongqing Changan i.e., Chongqing Changan and Shanghai Shibei go up and down completely randomly.
Pair Corralation between Chongqing Changan and Shanghai Shibei
Assuming the 90 days trading horizon Chongqing Changan Automobile is expected to generate 0.69 times more return on investment than Shanghai Shibei. However, Chongqing Changan Automobile is 1.46 times less risky than Shanghai Shibei. It trades about -0.31 of its potential returns per unit of risk. Shanghai Shibei Hi Tech is currently generating about -0.22 per unit of risk. If you would invest 1,384 in Chongqing Changan Automobile on October 28, 2024 and sell it today you would lose (124.00) from holding Chongqing Changan Automobile or give up 8.96% 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. Shanghai Shibei Hi Tech
Performance |
| Timeline |
| Chongqing Changan |
| Shanghai Shibei Hi |
Chongqing Changan and Shanghai Shibei Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chongqing Changan and Shanghai Shibei
The main advantage of trading using opposite Chongqing Changan and Shanghai Shibei positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chongqing Changan position performs unexpectedly, Shanghai Shibei 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 Shanghai Shibei will offset losses from the drop in Shanghai Shibei's long position.| Chongqing Changan vs. Guangzhou KDT Machinery | Chongqing Changan vs. Pengxin International Mining | Chongqing Changan vs. Shenyang Huitian Thermal | Chongqing Changan vs. Ningbo Jintian Copper |
| Shanghai Shibei vs. Servyou Software Group | Shanghai Shibei vs. Eyebright Medical Technology | Shanghai Shibei vs. Bohai Leasing Co | Shanghai Shibei vs. Bingo Software 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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