Correlation Between Western Metal and China Everbright
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By analyzing existing cross correlation between Western Metal Materials and China Everbright Bank, you can compare the effects of market volatilities on Western Metal and China Everbright 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 Everbright. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Metal and China Everbright.
Diversification Opportunities for Western Metal and China Everbright
0.29 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Western and China is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Western Metal Materials and China Everbright Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Everbright Bank 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 Everbright. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Everbright Bank has no effect on the direction of Western Metal i.e., Western Metal and China Everbright go up and down completely randomly.
Pair Corralation between Western Metal and China Everbright
Assuming the 90 days trading horizon Western Metal Materials is expected to generate 1.92 times more return on investment than China Everbright. However, Western Metal is 1.92 times more volatile than China Everbright Bank. It trades about 0.12 of its potential returns per unit of risk. China Everbright Bank is currently generating about 0.14 per unit of risk. If you would invest 1,602 in Western Metal Materials on November 7, 2024 and sell it today you would earn a total of 98.00 from holding Western Metal Materials or generate 6.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Western Metal Materials vs. China Everbright Bank
Performance |
| Timeline |
| Western Metal Materials |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Weak
| China Everbright Bank |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
OK
Western Metal and China Everbright Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Western Metal and China Everbright
The main advantage of trading using opposite Western Metal and China Everbright positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Metal position performs unexpectedly, China Everbright 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 Everbright will offset losses from the drop in China Everbright's long position.The idea behind Western Metal Materials and China Everbright Bank 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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