Correlation Between Wangneng Environment and China State
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By analyzing existing cross correlation between Wangneng Environment Co and China State Construction, you can compare the effects of market volatilities on Wangneng Environment and China State 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 Wangneng Environment with a short position of China State. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wangneng Environment and China State.
Diversification Opportunities for Wangneng Environment and China State
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Wangneng and China is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Wangneng Environment Co and China State Construction in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China State Construction and Wangneng Environment 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 Wangneng Environment Co are associated (or correlated) with China State. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China State Construction has no effect on the direction of Wangneng Environment i.e., Wangneng Environment and China State go up and down completely randomly.
Pair Corralation between Wangneng Environment and China State
Assuming the 90 days trading horizon Wangneng Environment Co is expected to generate 0.86 times more return on investment than China State. However, Wangneng Environment Co is 1.16 times less risky than China State. It trades about 0.15 of its potential returns per unit of risk. China State Construction is currently generating about -0.06 per unit of risk. If you would invest 1,486 in Wangneng Environment Co on September 2, 2024 and sell it today you would earn a total of 80.00 from holding Wangneng Environment Co or generate 5.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Wangneng Environment Co vs. China State Construction
Performance |
| Timeline |
| Wangneng Environment |
| China State Construction |
Wangneng Environment and China State Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wangneng Environment and China State
The main advantage of trading using opposite Wangneng Environment and China State positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wangneng Environment position performs unexpectedly, China State 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 China State will offset losses from the drop in China State's long position.The idea behind Wangneng Environment Co and China State Construction pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
| China State vs. 159681 | China State vs. 159005 | China State vs. Loctek Ergonomic Technology | China State vs. 516220 |
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 Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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