Correlation Between China Longyuan and Zhejiang Qianjiang
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By analyzing existing cross correlation between China Longyuan Power and Zhejiang Qianjiang Motorcycle, you can compare the effects of market volatilities on China Longyuan and Zhejiang Qianjiang 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 Longyuan with a short position of Zhejiang Qianjiang. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Longyuan and Zhejiang Qianjiang.
Diversification Opportunities for China Longyuan and Zhejiang Qianjiang
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between China and Zhejiang is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding China Longyuan Power and Zhejiang Qianjiang Motorcycle in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zhejiang Qianjiang and China Longyuan 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 Longyuan Power are associated (or correlated) with Zhejiang Qianjiang. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zhejiang Qianjiang has no effect on the direction of China Longyuan i.e., China Longyuan and Zhejiang Qianjiang go up and down completely randomly.
Pair Corralation between China Longyuan and Zhejiang Qianjiang
Assuming the 90 days trading horizon China Longyuan Power is expected to under-perform the Zhejiang Qianjiang. But the stock apears to be less risky and, when comparing its historical volatility, China Longyuan Power is 1.4 times less risky than Zhejiang Qianjiang. The stock trades about -0.19 of its potential returns per unit of risk. The Zhejiang Qianjiang Motorcycle is currently generating about -0.13 of returns per unit of risk over similar time horizon. If you would invest 1,827 in Zhejiang Qianjiang Motorcycle on September 14, 2024 and sell it today you would lose (101.00) from holding Zhejiang Qianjiang Motorcycle or give up 5.53% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
China Longyuan Power vs. Zhejiang Qianjiang Motorcycle
Performance |
| Timeline |
| China Longyuan Power |
| Zhejiang Qianjiang |
China Longyuan and Zhejiang Qianjiang Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Longyuan and Zhejiang Qianjiang
The main advantage of trading using opposite China Longyuan and Zhejiang Qianjiang positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Longyuan position performs unexpectedly, Zhejiang Qianjiang 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 Zhejiang Qianjiang will offset losses from the drop in Zhejiang Qianjiang's long position.| China Longyuan vs. Zhejiang Construction Investment | China Longyuan vs. Zhuhai Comleader Information | China Longyuan vs. Westone Information Industry | China Longyuan vs. Jiugui Liquor Co |
| Zhejiang Qianjiang vs. Lutian Machinery Co | Zhejiang Qianjiang vs. China Longyuan Power | Zhejiang Qianjiang vs. PetroChina Co Ltd | Zhejiang Qianjiang vs. Bank of China |
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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