Correlation Between Guangdong Jingyi and Weichai Heavy
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By analyzing existing cross correlation between Guangdong Jingyi Metal and Weichai Heavy Machinery, you can compare the effects of market volatilities on Guangdong Jingyi and Weichai Heavy 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 Guangdong Jingyi with a short position of Weichai Heavy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Guangdong Jingyi and Weichai Heavy.
Diversification Opportunities for Guangdong Jingyi and Weichai Heavy
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Guangdong and Weichai is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Guangdong Jingyi Metal and Weichai Heavy Machinery in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Weichai Heavy Machinery and Guangdong Jingyi 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 Guangdong Jingyi Metal are associated (or correlated) with Weichai Heavy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Weichai Heavy Machinery has no effect on the direction of Guangdong Jingyi i.e., Guangdong Jingyi and Weichai Heavy go up and down completely randomly.
Pair Corralation between Guangdong Jingyi and Weichai Heavy
Assuming the 90 days trading horizon Guangdong Jingyi is expected to generate 1.71 times less return on investment than Weichai Heavy. But when comparing it to its historical volatility, Guangdong Jingyi Metal is 2.02 times less risky than Weichai Heavy. It trades about 0.19 of its potential returns per unit of risk. Weichai Heavy Machinery is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest 1,118 in Weichai Heavy Machinery on August 27, 2024 and sell it today you would earn a total of 184.00 from holding Weichai Heavy Machinery or generate 16.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Guangdong Jingyi Metal vs. Weichai Heavy Machinery
Performance |
| Timeline |
| Guangdong Jingyi Metal |
| Weichai Heavy Machinery |
Guangdong Jingyi and Weichai Heavy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Guangdong Jingyi and Weichai Heavy
The main advantage of trading using opposite Guangdong Jingyi and Weichai Heavy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Guangdong Jingyi position performs unexpectedly, Weichai Heavy 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 Weichai Heavy will offset losses from the drop in Weichai Heavy's long position.| Guangdong Jingyi vs. Zijin Mining Group | Guangdong Jingyi vs. Wanhua Chemical Group | Guangdong Jingyi vs. Baoshan Iron Steel | Guangdong Jingyi vs. Rongsheng Petrochemical Co |
| Weichai Heavy vs. Xizi Clean Energy | Weichai Heavy vs. Everdisplay Optronics Shanghai | Weichai Heavy vs. Shuhua Sports Co | Weichai Heavy vs. Guangdong Jingyi Metal |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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