Correlation Between China Securities and Xiamen Wanli
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By analyzing existing cross correlation between China Securities 800 and Xiamen Wanli Stone, you can compare the effects of market volatilities on China Securities and Xiamen Wanli 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 Xiamen Wanli. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Securities and Xiamen Wanli.
Diversification Opportunities for China Securities and Xiamen Wanli
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between China and Xiamen is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding China Securities 800 and Xiamen Wanli Stone in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xiamen Wanli Stone 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 Xiamen Wanli. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xiamen Wanli Stone has no effect on the direction of China Securities i.e., China Securities and Xiamen Wanli go up and down completely randomly.
Pair Corralation between China Securities and Xiamen Wanli
Assuming the 90 days trading horizon China Securities is expected to generate 4.82 times less return on investment than Xiamen Wanli. But when comparing it to its historical volatility, China Securities 800 is 1.77 times less risky than Xiamen Wanli. It trades about 0.05 of its potential returns per unit of risk. Xiamen Wanli Stone is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 2,380 in Xiamen Wanli Stone on September 1, 2024 and sell it today you would earn a total of 1,430 from holding Xiamen Wanli Stone or generate 60.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
China Securities 800 vs. Xiamen Wanli Stone
Performance |
| Timeline |
China Securities and Xiamen Wanli Volatility Contrast
Predicted Return Density |
| Returns |
China Securities 800
Pair trading matchups for China Securities
Xiamen Wanli Stone
Pair trading matchups for Xiamen Wanli
Pair Trading with China Securities and Xiamen Wanli
The main advantage of trading using opposite China Securities and Xiamen Wanli positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Securities position performs unexpectedly, Xiamen Wanli 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 Xiamen Wanli will offset losses from the drop in Xiamen Wanli's long position.| China Securities vs. Everjoy Health Group | China Securities vs. Fuzhou Rockchip Electronics | China Securities vs. Hangzhou Prevail Optoelectronic | China Securities vs. Aurora Optoelectronics Co |
| Xiamen Wanli vs. China Publishing Media | Xiamen Wanli vs. Uroica Mining Safety | Xiamen Wanli vs. Chinese Universe Publishing | Xiamen Wanli vs. Western Mining 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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