Correlation Between Western Metal and China Satellite
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By analyzing existing cross correlation between Western Metal Materials and China Satellite Communications, you can compare the effects of market volatilities on Western Metal and China Satellite 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 China Satellite. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Metal and China Satellite.
Diversification Opportunities for Western Metal and China Satellite
-0.13 | Correlation Coefficient |
Good diversification
The 3 months correlation between Western and China is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Western Metal Materials and China Satellite Communications in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Satellite Comm 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 China Satellite. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Satellite Comm has no effect on the direction of Western Metal i.e., Western Metal and China Satellite go up and down completely randomly.
Pair Corralation between Western Metal and China Satellite
Assuming the 90 days trading horizon Western Metal is expected to generate 2.97 times less return on investment than China Satellite. But when comparing it to its historical volatility, Western Metal Materials is 1.29 times less risky than China Satellite. It trades about 0.02 of its potential returns per unit of risk. China Satellite Communications is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 1,236 in China Satellite Communications on November 8, 2024 and sell it today you would earn a total of 743.00 from holding China Satellite Communications or generate 60.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Western Metal Materials vs. China Satellite Communications
Performance |
| Timeline |
| Western Metal Materials |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| China Satellite Comm |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Western Metal and China Satellite Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Western Metal and China Satellite
The main advantage of trading using opposite Western Metal and China Satellite positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Metal position performs unexpectedly, China Satellite 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 Satellite will offset losses from the drop in China Satellite's long position.The idea behind Western Metal Materials and China Satellite Communications 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.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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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