Correlation Between Weichai Heavy and China Everbright
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By analyzing existing cross correlation between Weichai Heavy Machinery and China Everbright Bank, you can compare the effects of market volatilities on Weichai Heavy and China Everbright 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 China Everbright. Check out your portfolio center. Please also check ongoing floating volatility patterns of Weichai Heavy and China Everbright.
Diversification Opportunities for Weichai Heavy and China Everbright
0.45 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Weichai and China is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Weichai Heavy Machinery and China Everbright Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Everbright Bank 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 China Everbright. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Everbright Bank has no effect on the direction of Weichai Heavy i.e., Weichai Heavy and China Everbright go up and down completely randomly.
Pair Corralation between Weichai Heavy and China Everbright
Assuming the 90 days trading horizon Weichai Heavy Machinery is expected to generate 8.77 times more return on investment than China Everbright. However, Weichai Heavy is 8.77 times more volatile than China Everbright Bank. It trades about 0.59 of its potential returns per unit of risk. China Everbright Bank is currently generating about -0.07 per unit of risk. If you would invest 1,876 in Weichai Heavy Machinery on November 29, 2024 and sell it today you would earn a total of 1,293 from holding Weichai Heavy Machinery or generate 68.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Weichai Heavy Machinery vs. China Everbright Bank
Performance |
| Timeline |
| Weichai Heavy Machinery |
| China Everbright Bank |
Weichai Heavy and China Everbright Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Weichai Heavy and China Everbright
The main advantage of trading using opposite Weichai Heavy and China Everbright positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Weichai Heavy position performs unexpectedly, China Everbright 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 China Everbright will offset losses from the drop in China Everbright's long position.| Weichai Heavy vs. Ligao Foods CoLtd | Weichai Heavy vs. Jiangxi Sunshine Dairy | Weichai Heavy vs. HaiXin Foods Co | Weichai Heavy vs. Ningxia Younglight Chemicals |
| China Everbright vs. Hua Xia Bank | China Everbright vs. Jiangsu Jinling Sports | China Everbright vs. V V Food | China Everbright vs. Postal Savings Bank |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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