Correlation Between China Securities and Weichai Heavy
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By analyzing existing cross correlation between China Securities 800 and Weichai Heavy Machinery, you can compare the effects of market volatilities on China Securities and Weichai Heavy 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 China Securities with a short position of Weichai Heavy. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Securities and Weichai Heavy.
Diversification Opportunities for China Securities and Weichai Heavy
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between China and Weichai is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding China Securities 800 and Weichai Heavy Machinery in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Weichai Heavy Machinery and China Securities 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 China Securities 800 are associated (or correlated) with Weichai Heavy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Weichai Heavy Machinery has no effect on the direction of China Securities i.e., China Securities and Weichai Heavy go up and down completely randomly.
Pair Corralation between China Securities and Weichai Heavy
Assuming the 90 days trading horizon China Securities 800 is expected to under-perform the Weichai Heavy. But the index apears to be less risky and, when comparing its historical volatility, China Securities 800 is 3.86 times less risky than Weichai Heavy. The index trades about -0.1 of its potential returns per unit of risk. The Weichai Heavy Machinery is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 1,118 in Weichai Heavy Machinery on August 28, 2024 and sell it today you would earn a total of 131.00 from holding Weichai Heavy Machinery or generate 11.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
China Securities 800 vs. Weichai Heavy Machinery
Performance |
| Timeline |
China Securities and Weichai Heavy Volatility Contrast
Predicted Return Density |
| Returns |
China Securities 800
Pair trading matchups for China Securities
Weichai Heavy Machinery
Pair trading matchups for Weichai Heavy
Pair Trading with China Securities and Weichai Heavy
The main advantage of trading using opposite China Securities and Weichai Heavy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Securities position performs unexpectedly, Weichai Heavy 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 Weichai Heavy will offset losses from the drop in Weichai Heavy's long position.| China Securities vs. Shandong Ruifeng Chemical | China Securities vs. Zhongtong Guomai Communication | China Securities vs. Gome Telecom Equipment | China Securities vs. Dymatic Chemicals |
| Weichai Heavy vs. China Asset Management | Weichai Heavy vs. Harvest Fund Management | Weichai Heavy vs. JCHX Mining Management | Weichai Heavy vs. AVIC Fund Management |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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