Correlation Between Weichai Heavy and Tongyu Communication
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By analyzing existing cross correlation between Weichai Heavy Machinery and Tongyu Communication, you can compare the effects of market volatilities on Weichai Heavy and Tongyu Communication 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 Tongyu Communication. Check out your portfolio center. Please also check ongoing floating volatility patterns of Weichai Heavy and Tongyu Communication.
Diversification Opportunities for Weichai Heavy and Tongyu Communication
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Weichai and Tongyu is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Weichai Heavy Machinery and Tongyu Communication in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tongyu Communication 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 Tongyu Communication. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tongyu Communication has no effect on the direction of Weichai Heavy i.e., Weichai Heavy and Tongyu Communication go up and down completely randomly.
Pair Corralation between Weichai Heavy and Tongyu Communication
Assuming the 90 days trading horizon Weichai Heavy is expected to generate 3.02 times less return on investment than Tongyu Communication. But when comparing it to its historical volatility, Weichai Heavy Machinery is 1.38 times less risky than Tongyu Communication. It trades about 0.03 of its potential returns per unit of risk. Tongyu Communication is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 893.00 in Tongyu Communication on August 25, 2024 and sell it today you would earn a total of 872.00 from holding Tongyu Communication or generate 97.65% 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. Tongyu Communication
Performance |
| Timeline |
| Weichai Heavy Machinery |
| Tongyu Communication |
Weichai Heavy and Tongyu Communication Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Weichai Heavy and Tongyu Communication
The main advantage of trading using opposite Weichai Heavy and Tongyu Communication positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Weichai Heavy position performs unexpectedly, Tongyu Communication 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 Tongyu Communication will offset losses from the drop in Tongyu Communication'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 |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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