Correlation Between Chongqing Changan and Eastern Communications
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By analyzing existing cross correlation between Chongqing Changan Automobile and Eastern Communications Co, you can compare the effects of market volatilities on Chongqing Changan and Eastern Communications 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 Eastern Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chongqing Changan and Eastern Communications.
Diversification Opportunities for Chongqing Changan and Eastern Communications
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Chongqing and Eastern is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Chongqing Changan Automobile and Eastern Communications Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eastern Communications 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 Eastern Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eastern Communications has no effect on the direction of Chongqing Changan i.e., Chongqing Changan and Eastern Communications go up and down completely randomly.
Pair Corralation between Chongqing Changan and Eastern Communications
Assuming the 90 days trading horizon Chongqing Changan is expected to generate 1.48 times less return on investment than Eastern Communications. In addition to that, Chongqing Changan is 1.08 times more volatile than Eastern Communications Co. It trades about 0.07 of its total potential returns per unit of risk. Eastern Communications Co is currently generating about 0.11 per unit of volatility. If you would invest 39.00 in Eastern Communications Co on September 13, 2024 and sell it today you would earn a total of 4.00 from holding Eastern Communications Co or generate 10.26% 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. Eastern Communications Co
Performance |
| Timeline |
| Chongqing Changan |
| Eastern Communications |
Chongqing Changan and Eastern Communications Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chongqing Changan and Eastern Communications
The main advantage of trading using opposite Chongqing Changan and Eastern Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chongqing Changan position performs unexpectedly, Eastern Communications 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 Eastern Communications will offset losses from the drop in Eastern Communications' long position.| Chongqing Changan vs. Cambricon Technologies Corp | Chongqing Changan vs. Loongson Technology Corp | Chongqing Changan vs. Shenzhen Fortune Trend | Chongqing Changan vs. Chongqing Road Bridge |
| Eastern Communications vs. Industrial and Commercial | Eastern Communications vs. China Construction Bank | Eastern Communications vs. Bank of China | Eastern Communications vs. Agricultural Bank of |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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