Correlation Between Western Metal and Beijing Wantai
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By analyzing existing cross correlation between Western Metal Materials and Beijing Wantai Biological, you can compare the effects of market volatilities on Western Metal and Beijing Wantai 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 Beijing Wantai. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Metal and Beijing Wantai.
Diversification Opportunities for Western Metal and Beijing Wantai
-0.29 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Western and Beijing is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Western Metal Materials and Beijing Wantai Biological in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Beijing Wantai Biological 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 Beijing Wantai. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Beijing Wantai Biological has no effect on the direction of Western Metal i.e., Western Metal and Beijing Wantai go up and down completely randomly.
Pair Corralation between Western Metal and Beijing Wantai
Assuming the 90 days trading horizon Western Metal Materials is expected to generate 1.73 times more return on investment than Beijing Wantai. However, Western Metal is 1.73 times more volatile than Beijing Wantai Biological. It trades about 0.01 of its potential returns per unit of risk. Beijing Wantai Biological is currently generating about -0.04 per unit of risk. If you would invest 1,719 in Western Metal Materials on November 6, 2024 and sell it today you would lose (19.00) from holding Western Metal Materials or give up 1.11% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Western Metal Materials vs. Beijing Wantai Biological
Performance |
| Timeline |
| Western Metal Materials |
| Beijing Wantai Biological |
Western Metal and Beijing Wantai Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Western Metal and Beijing Wantai
The main advantage of trading using opposite Western Metal and Beijing Wantai positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Metal position performs unexpectedly, Beijing Wantai 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 Beijing Wantai will offset losses from the drop in Beijing Wantai'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 |
| Beijing Wantai vs. Smartgiant Technology Co | Beijing Wantai vs. Anhui Transport Consulting | Beijing Wantai vs. Tianjin Ruixin Technology | Beijing Wantai vs. ROPEOK Technology Group |
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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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