Correlation Between Chongqing Changan and Lao Feng
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By analyzing existing cross correlation between Chongqing Changan Automobile and Lao Feng Xiang, you can compare the effects of market volatilities on Chongqing Changan and Lao Feng 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 Lao Feng. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chongqing Changan and Lao Feng.
Diversification Opportunities for Chongqing Changan and Lao Feng
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Chongqing and Lao is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Chongqing Changan Automobile and Lao Feng Xiang in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lao Feng Xiang 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 Lao Feng. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lao Feng Xiang has no effect on the direction of Chongqing Changan i.e., Chongqing Changan and Lao Feng go up and down completely randomly.
Pair Corralation between Chongqing Changan and Lao Feng
Assuming the 90 days trading horizon Chongqing Changan Automobile is expected to generate 0.77 times more return on investment than Lao Feng. However, Chongqing Changan Automobile is 1.29 times less risky than Lao Feng. It trades about -0.13 of its potential returns per unit of risk. Lao Feng Xiang is currently generating about -0.2 per unit of risk. If you would invest 1,297 in Chongqing Changan Automobile on November 3, 2024 and sell it today you would lose (42.00) from holding Chongqing Changan Automobile or give up 3.24% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Chongqing Changan Automobile vs. Lao Feng Xiang
Performance |
| Timeline |
| Chongqing Changan |
| Lao Feng Xiang |
Chongqing Changan and Lao Feng Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chongqing Changan and Lao Feng
The main advantage of trading using opposite Chongqing Changan and Lao Feng positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chongqing Changan position performs unexpectedly, Lao Feng 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 Lao Feng will offset losses from the drop in Lao Feng's long position.| Chongqing Changan vs. Yoantion Industrial IncLtd | Chongqing Changan vs. Bosera CMSK Industrial | Chongqing Changan vs. Malion New Materials | Chongqing Changan vs. Western Metal Materials |
| Lao Feng vs. Zhongrun Resources Investment | Lao Feng vs. Xiandai Investment Co | Lao Feng vs. Nuode Investment Co | Lao Feng vs. Shenzhen Centralcon 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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