Correlation Between Weichai Heavy and Zhongzhu Medical
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By analyzing existing cross correlation between Weichai Heavy Machinery and Zhongzhu Medical Holdings, you can compare the effects of market volatilities on Weichai Heavy and Zhongzhu Medical 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 Zhongzhu Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Weichai Heavy and Zhongzhu Medical.
Diversification Opportunities for Weichai Heavy and Zhongzhu Medical
0.04 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Weichai and Zhongzhu is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Weichai Heavy Machinery and Zhongzhu Medical Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zhongzhu Medical Holdings 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 Zhongzhu Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zhongzhu Medical Holdings has no effect on the direction of Weichai Heavy i.e., Weichai Heavy and Zhongzhu Medical go up and down completely randomly.
Pair Corralation between Weichai Heavy and Zhongzhu Medical
Assuming the 90 days trading horizon Weichai Heavy Machinery is expected to generate 2.45 times more return on investment than Zhongzhu Medical. However, Weichai Heavy is 2.45 times more volatile than Zhongzhu Medical Holdings. It trades about 0.35 of its potential returns per unit of risk. Zhongzhu Medical Holdings is currently generating about -0.41 per unit of risk. If you would invest 1,267 in Weichai Heavy Machinery on October 13, 2024 and sell it today you would earn a total of 593.00 from holding Weichai Heavy Machinery or generate 46.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Weichai Heavy Machinery vs. Zhongzhu Medical Holdings
Performance |
| Timeline |
| Weichai Heavy Machinery |
| Zhongzhu Medical Holdings |
Weichai Heavy and Zhongzhu Medical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Weichai Heavy and Zhongzhu Medical
The main advantage of trading using opposite Weichai Heavy and Zhongzhu Medical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Weichai Heavy position performs unexpectedly, Zhongzhu Medical 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 Zhongzhu Medical will offset losses from the drop in Zhongzhu Medical's long position.| Weichai Heavy vs. Leyard Optoelectronic | Weichai Heavy vs. Ningxia Younglight Chemicals | Weichai Heavy vs. Longjian Road Bridge | Weichai Heavy vs. Miracll Chemicals Co |
| Zhongzhu Medical vs. Shantui Construction Machinery | Zhongzhu Medical vs. Sinomach General Machinery | Zhongzhu Medical vs. Weichai Heavy Machinery | Zhongzhu Medical vs. Nanxing Furniture Machinery |
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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