Correlation Between Changchun High and Hainan Drinda
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By analyzing existing cross correlation between Changchun High New and Hainan Drinda Automotive, you can compare the effects of market volatilities on Changchun High and Hainan Drinda 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 Changchun High with a short position of Hainan Drinda. Check out your portfolio center. Please also check ongoing floating volatility patterns of Changchun High and Hainan Drinda.
Diversification Opportunities for Changchun High and Hainan Drinda
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Changchun and Hainan is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Changchun High New and Hainan Drinda Automotive in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hainan Drinda Automotive and Changchun High 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 Changchun High New are associated (or correlated) with Hainan Drinda. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hainan Drinda Automotive has no effect on the direction of Changchun High i.e., Changchun High and Hainan Drinda go up and down completely randomly.
Pair Corralation between Changchun High and Hainan Drinda
Assuming the 90 days trading horizon Changchun High New is expected to under-perform the Hainan Drinda. But the stock apears to be less risky and, when comparing its historical volatility, Changchun High New is 1.7 times less risky than Hainan Drinda. The stock trades about -0.03 of its potential returns per unit of risk. The Hainan Drinda Automotive is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest 12,790 in Hainan Drinda Automotive on September 4, 2024 and sell it today you would lose (5,590) from holding Hainan Drinda Automotive or give up 43.71% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Changchun High New vs. Hainan Drinda Automotive
Performance |
| Timeline |
| Changchun High New |
| Hainan Drinda Automotive |
Changchun High and Hainan Drinda Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Changchun High and Hainan Drinda
The main advantage of trading using opposite Changchun High and Hainan Drinda positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Changchun High position performs unexpectedly, Hainan Drinda 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 Hainan Drinda will offset losses from the drop in Hainan Drinda's long position.| Changchun High vs. Industrial and Commercial | Changchun High vs. Agricultural Bank of | Changchun High vs. China Construction Bank | Changchun High vs. Bank of China |
| Hainan Drinda vs. Cultural Investment Holdings | Hainan Drinda vs. Gome Telecom Equipment | Hainan Drinda vs. Bus Online Co | Hainan Drinda vs. Holitech Technology 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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