Correlation Between Weichai Heavy and Hunan Tyen
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By analyzing existing cross correlation between Weichai Heavy Machinery and Hunan Tyen Machinery, you can compare the effects of market volatilities on Weichai Heavy and Hunan Tyen 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 Hunan Tyen. Check out your portfolio center. Please also check ongoing floating volatility patterns of Weichai Heavy and Hunan Tyen.
Diversification Opportunities for Weichai Heavy and Hunan Tyen
-0.31 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Weichai and Hunan is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Weichai Heavy Machinery and Hunan Tyen Machinery in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hunan Tyen Machinery 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 Hunan Tyen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hunan Tyen Machinery has no effect on the direction of Weichai Heavy i.e., Weichai Heavy and Hunan Tyen go up and down completely randomly.
Pair Corralation between Weichai Heavy and Hunan Tyen
Assuming the 90 days trading horizon Weichai Heavy Machinery is expected to generate 1.13 times more return on investment than Hunan Tyen. However, Weichai Heavy is 1.13 times more volatile than Hunan Tyen Machinery. It trades about 0.13 of its potential returns per unit of risk. Hunan Tyen Machinery is currently generating about 0.05 per unit of risk. If you would invest 839.00 in Weichai Heavy Machinery on October 12, 2024 and sell it today you would earn a total of 987.00 from holding Weichai Heavy Machinery or generate 117.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Weichai Heavy Machinery vs. Hunan Tyen Machinery
Performance |
| Timeline |
| Weichai Heavy Machinery |
| Hunan Tyen Machinery |
Weichai Heavy and Hunan Tyen Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Weichai Heavy and Hunan Tyen
The main advantage of trading using opposite Weichai Heavy and Hunan Tyen positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Weichai Heavy position performs unexpectedly, Hunan Tyen 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 Hunan Tyen will offset losses from the drop in Hunan Tyen's long position.| Weichai Heavy vs. Lonkey Industrial Co | Weichai Heavy vs. Universal Scientific Industrial | Weichai Heavy vs. Sportsoul Co Ltd | Weichai Heavy vs. Tibet Huayu Mining |
| Hunan Tyen vs. Postal Savings Bank | Hunan Tyen vs. Chengdu Spaceon Electronics | Hunan Tyen vs. Ningbo Tech Bank Co | Hunan Tyen vs. Xiamen Bank 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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