Correlation Between Weichai Heavy and Shantui Construction
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By analyzing existing cross correlation between Weichai Heavy Machinery and Shantui Construction Machinery, you can compare the effects of market volatilities on Weichai Heavy and Shantui Construction 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 Weichai Heavy with a short position of Shantui Construction. Check out your portfolio center. Please also check ongoing floating volatility patterns of Weichai Heavy and Shantui Construction.
Diversification Opportunities for Weichai Heavy and Shantui Construction
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Weichai and Shantui is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Weichai Heavy Machinery and Shantui Construction Machinery in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shantui Construction and Weichai Heavy 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 Weichai Heavy Machinery are associated (or correlated) with Shantui Construction. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shantui Construction has no effect on the direction of Weichai Heavy i.e., Weichai Heavy and Shantui Construction go up and down completely randomly.
Pair Corralation between Weichai Heavy and Shantui Construction
Assuming the 90 days trading horizon Weichai Heavy is expected to generate 2.04 times less return on investment than Shantui Construction. In addition to that, Weichai Heavy is 1.44 times more volatile than Shantui Construction Machinery. It trades about 0.13 of its total potential returns per unit of risk. Shantui Construction Machinery is currently generating about 0.39 per unit of volatility. If you would invest 760.00 in Shantui Construction Machinery on August 25, 2024 and sell it today you would earn a total of 250.00 from holding Shantui Construction Machinery or generate 32.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Weichai Heavy Machinery vs. Shantui Construction Machinery
Performance |
| Timeline |
| Weichai Heavy Machinery |
| Shantui Construction |
Weichai Heavy and Shantui Construction Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Weichai Heavy and Shantui Construction
The main advantage of trading using opposite Weichai Heavy and Shantui Construction positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Weichai Heavy position performs unexpectedly, Shantui Construction 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 Shantui Construction will offset losses from the drop in Shantui Construction's long position.| Weichai Heavy vs. Tongyu Communication | Weichai Heavy vs. FSPG Hi Tech Co | Weichai Heavy vs. HaiXin Foods Co | Weichai Heavy vs. Suzhou Weizhixiang Food |
| Shantui Construction vs. Guangzhou Haozhi Industrial | Shantui Construction vs. Sunwave Communications Co | Shantui Construction vs. Shandong Mining Machinery | Shantui Construction vs. Hainan Airlines 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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