Correlation Between Western Metal and King Strong
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By analyzing existing cross correlation between Western Metal Materials and King Strong New Material, you can compare the effects of market volatilities on Western Metal and King Strong 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 Western Metal with a short position of King Strong. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Metal and King Strong.
Diversification Opportunities for Western Metal and King Strong
0.97 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Western and King is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding Western Metal Materials and King Strong New Material in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on King Strong New and Western Metal 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 Western Metal Materials are associated (or correlated) with King Strong. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of King Strong New has no effect on the direction of Western Metal i.e., Western Metal and King Strong go up and down completely randomly.
Pair Corralation between Western Metal and King Strong
Assuming the 90 days trading horizon Western Metal is expected to generate 1.75 times less return on investment than King Strong. But when comparing it to its historical volatility, Western Metal Materials is 1.32 times less risky than King Strong. It trades about 0.04 of its potential returns per unit of risk. King Strong New Material is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 2,091 in King Strong New Material on August 28, 2024 and sell it today you would earn a total of 76.00 from holding King Strong New Material or generate 3.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Western Metal Materials vs. King Strong New Material
Performance |
| Timeline |
| Western Metal Materials |
| King Strong New |
Western Metal and King Strong Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Western Metal and King Strong
The main advantage of trading using opposite Western Metal and King Strong positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Metal position performs unexpectedly, King Strong 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 King Strong will offset losses from the drop in King Strong's long position.| Western Metal vs. Zijin Mining Group | Western Metal vs. Wanhua Chemical Group | Western Metal vs. Baoshan Iron Steel | Western Metal vs. Shandong Gold Mining |
| King Strong vs. Rising Nonferrous Metals | King Strong vs. Qinghaihuading Industrial Co | King Strong vs. Western Metal Materials | King Strong vs. Shenzhen Zhongzhuang Construction |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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