Correlation Between Weichai Heavy and Jinhui Liquor
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By analyzing existing cross correlation between Weichai Heavy Machinery and Jinhui Liquor Co, you can compare the effects of market volatilities on Weichai Heavy and Jinhui Liquor 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 Jinhui Liquor. Check out your portfolio center. Please also check ongoing floating volatility patterns of Weichai Heavy and Jinhui Liquor.
Diversification Opportunities for Weichai Heavy and Jinhui Liquor
-0.49 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Weichai and Jinhui is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Weichai Heavy Machinery and Jinhui Liquor Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jinhui Liquor 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 Jinhui Liquor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jinhui Liquor has no effect on the direction of Weichai Heavy i.e., Weichai Heavy and Jinhui Liquor go up and down completely randomly.
Pair Corralation between Weichai Heavy and Jinhui Liquor
Assuming the 90 days trading horizon Weichai Heavy Machinery is expected to generate 1.35 times more return on investment than Jinhui Liquor. However, Weichai Heavy is 1.35 times more volatile than Jinhui Liquor Co. It trades about 0.06 of its potential returns per unit of risk. Jinhui Liquor Co is currently generating about -0.02 per unit of risk. If you would invest 973.00 in Weichai Heavy Machinery on October 16, 2024 and sell it today you would earn a total of 766.00 from holding Weichai Heavy Machinery or generate 78.73% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Weichai Heavy Machinery vs. Jinhui Liquor Co
Performance |
Timeline |
Weichai Heavy Machinery |
Jinhui Liquor |
Weichai Heavy and Jinhui Liquor Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Weichai Heavy and Jinhui Liquor
The main advantage of trading using opposite Weichai Heavy and Jinhui Liquor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Weichai Heavy position performs unexpectedly, Jinhui Liquor 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 Jinhui Liquor will offset losses from the drop in Jinhui Liquor's long position.Weichai Heavy vs. Tibet Huayu Mining | Weichai Heavy vs. Qiaoyin Environmental Tech | Weichai Heavy vs. GreenTech Environmental Co | Weichai Heavy vs. Zhongshan Public Utilities |
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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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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