Correlation Between Chongqing Changan and Shanghai Material
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By analyzing existing cross correlation between Chongqing Changan Automobile and Shanghai Material Trading, you can compare the effects of market volatilities on Chongqing Changan and Shanghai Material 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 Material. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chongqing Changan and Shanghai Material.
Diversification Opportunities for Chongqing Changan and Shanghai Material
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Chongqing and Shanghai is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Chongqing Changan Automobile and Shanghai Material Trading in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shanghai Material Trading 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 Material. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shanghai Material Trading has no effect on the direction of Chongqing Changan i.e., Chongqing Changan and Shanghai Material go up and down completely randomly.
Pair Corralation between Chongqing Changan and Shanghai Material
Assuming the 90 days trading horizon Chongqing Changan Automobile is expected to under-perform the Shanghai Material. But the stock apears to be less risky and, when comparing its historical volatility, Chongqing Changan Automobile is 1.64 times less risky than Shanghai Material. The stock trades about -0.01 of its potential returns per unit of risk. The Shanghai Material Trading is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest 954.00 in Shanghai Material Trading on September 5, 2024 and sell it today you would earn a total of 240.00 from holding Shanghai Material Trading or generate 25.16% 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. Shanghai Material Trading
Performance |
| Timeline |
| Chongqing Changan |
| Shanghai Material Trading |
Chongqing Changan and Shanghai Material Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chongqing Changan and Shanghai Material
The main advantage of trading using opposite Chongqing Changan and Shanghai Material positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chongqing Changan position performs unexpectedly, Shanghai Material 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 Material will offset losses from the drop in Shanghai Material's long position.| Chongqing Changan vs. Bloomage Biotechnology Corp | Chongqing Changan vs. Jiangsu Financial Leasing | Chongqing Changan vs. Hua Xia Bank | Chongqing Changan vs. Xiamen Bank Co |
| Shanghai Material vs. Cangzhou Mingzhu Plastic | Shanghai Material vs. Sobute New Materials | Shanghai Material vs. Hangzhou Gaoxin Rubber | Shanghai Material vs. Guangzhou Tinci Materials |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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