Correlation Between Weichai Heavy and Shaanxi Construction
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By analyzing existing cross correlation between Weichai Heavy Machinery and Shaanxi Construction Machinery, you can compare the effects of market volatilities on Weichai Heavy and Shaanxi 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 Shaanxi Construction. Check out your portfolio center. Please also check ongoing floating volatility patterns of Weichai Heavy and Shaanxi Construction.
Diversification Opportunities for Weichai Heavy and Shaanxi Construction
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Weichai and Shaanxi is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Weichai Heavy Machinery and Shaanxi Construction Machinery in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shaanxi 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 Shaanxi Construction. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shaanxi Construction has no effect on the direction of Weichai Heavy i.e., Weichai Heavy and Shaanxi Construction go up and down completely randomly.
Pair Corralation between Weichai Heavy and Shaanxi Construction
Assuming the 90 days trading horizon Weichai Heavy Machinery is expected to generate 0.87 times more return on investment than Shaanxi Construction. However, Weichai Heavy Machinery is 1.15 times less risky than Shaanxi Construction. It trades about 0.04 of its potential returns per unit of risk. Shaanxi Construction Machinery is currently generating about -0.02 per unit of risk. If you would invest 915.00 in Weichai Heavy Machinery on August 28, 2024 and sell it today you would earn a total of 387.00 from holding Weichai Heavy Machinery or generate 42.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Weichai Heavy Machinery vs. Shaanxi Construction Machinery
Performance |
| Timeline |
| Weichai Heavy Machinery |
| Shaanxi Construction |
Weichai Heavy and Shaanxi Construction Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Weichai Heavy and Shaanxi Construction
The main advantage of trading using opposite Weichai Heavy and Shaanxi Construction positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Weichai Heavy position performs unexpectedly, Shaanxi 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 Shaanxi Construction will offset losses from the drop in Shaanxi Construction's long position.| Weichai Heavy vs. China Asset Management | Weichai Heavy vs. Harvest Fund Management | Weichai Heavy vs. JCHX Mining Management | Weichai Heavy vs. AVIC Fund Management |
| Shaanxi Construction vs. Cambricon Technologies Corp | Shaanxi Construction vs. Loongson Technology Corp | Shaanxi Construction vs. Chongqing Road Bridge | Shaanxi Construction vs. Shenzhen Fortune Trend |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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