Correlation Between Jizhong Energy and Chongqing Changan
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By analyzing existing cross correlation between Jizhong Energy Resources and Chongqing Changan Automobile, you can compare the effects of market volatilities on Jizhong Energy and Chongqing Changan 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 Jizhong Energy with a short position of Chongqing Changan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Jizhong Energy and Chongqing Changan.
Diversification Opportunities for Jizhong Energy and Chongqing Changan
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Jizhong and Chongqing is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Jizhong Energy Resources and Chongqing Changan Automobile in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chongqing Changan and Jizhong Energy 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 Jizhong Energy Resources are associated (or correlated) with Chongqing Changan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chongqing Changan has no effect on the direction of Jizhong Energy i.e., Jizhong Energy and Chongqing Changan go up and down completely randomly.
Pair Corralation between Jizhong Energy and Chongqing Changan
Assuming the 90 days trading horizon Jizhong Energy is expected to generate 2.65 times less return on investment than Chongqing Changan. But when comparing it to its historical volatility, Jizhong Energy Resources is 1.02 times less risky than Chongqing Changan. It trades about 0.01 of its potential returns per unit of risk. Chongqing Changan Automobile is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 304.00 in Chongqing Changan Automobile on August 29, 2024 and sell it today you would earn a total of 60.00 from holding Chongqing Changan Automobile or generate 19.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Jizhong Energy Resources vs. Chongqing Changan Automobile
Performance |
| Timeline |
| Jizhong Energy Resources |
| Chongqing Changan |
Jizhong Energy and Chongqing Changan Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Jizhong Energy and Chongqing Changan
The main advantage of trading using opposite Jizhong Energy and Chongqing Changan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Jizhong Energy position performs unexpectedly, Chongqing Changan 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 Chongqing Changan will offset losses from the drop in Chongqing Changan's long position.| Jizhong Energy vs. Linewell Software Co | Jizhong Energy vs. China Satellite Communications | Jizhong Energy vs. SUNSEA Telecommunications Co | Jizhong Energy vs. Dhc Software 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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