Correlation Between Wuxi Chemical and Cathay Biotech
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By analyzing existing cross correlation between Wuxi Chemical Equipment and Cathay Biotech, you can compare the effects of market volatilities on Wuxi Chemical and Cathay Biotech 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 Wuxi Chemical with a short position of Cathay Biotech. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wuxi Chemical and Cathay Biotech.
Diversification Opportunities for Wuxi Chemical and Cathay Biotech
-0.12 | Correlation Coefficient |
Good diversification
The 3 months correlation between Wuxi and Cathay is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Wuxi Chemical Equipment and Cathay Biotech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cathay Biotech and Wuxi Chemical 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 Wuxi Chemical Equipment are associated (or correlated) with Cathay Biotech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cathay Biotech has no effect on the direction of Wuxi Chemical i.e., Wuxi Chemical and Cathay Biotech go up and down completely randomly.
Pair Corralation between Wuxi Chemical and Cathay Biotech
Assuming the 90 days trading horizon Wuxi Chemical Equipment is expected to generate 1.11 times more return on investment than Cathay Biotech. However, Wuxi Chemical is 1.11 times more volatile than Cathay Biotech. It trades about -0.01 of its potential returns per unit of risk. Cathay Biotech is currently generating about -0.03 per unit of risk. If you would invest 4,281 in Wuxi Chemical Equipment on October 9, 2024 and sell it today you would lose (1,007) from holding Wuxi Chemical Equipment or give up 23.52% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Wuxi Chemical Equipment vs. Cathay Biotech
Performance |
| Timeline |
| Wuxi Chemical Equipment |
| Cathay Biotech |
Wuxi Chemical and Cathay Biotech Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wuxi Chemical and Cathay Biotech
The main advantage of trading using opposite Wuxi Chemical and Cathay Biotech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wuxi Chemical position performs unexpectedly, Cathay Biotech 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 Cathay Biotech will offset losses from the drop in Cathay Biotech's long position.| Wuxi Chemical vs. Southern PublishingMedia Co | Wuxi Chemical vs. Xinjiang Baodi Mining | Wuxi Chemical vs. Jinhui Mining Co | Wuxi Chemical vs. Chinese Universe Publishing |
| Cathay Biotech vs. LianChuang Electronic Technology | Cathay Biotech vs. HaiXin Foods Co | Cathay Biotech vs. Beijing YanDong MicroElectronic | Cathay Biotech vs. Marssenger Kitchenware 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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