Correlation Between Changchun and Guangdong Wens
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By analyzing existing cross correlation between Changchun UP Optotech and Guangdong Wens Foodstuff, you can compare the effects of market volatilities on Changchun and Guangdong Wens 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 Changchun with a short position of Guangdong Wens. Check out your portfolio center. Please also check ongoing floating volatility patterns of Changchun and Guangdong Wens.
Diversification Opportunities for Changchun and Guangdong Wens
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Changchun and Guangdong is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Changchun UP Optotech and Guangdong Wens Foodstuff in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guangdong Wens Foodstuff and Changchun 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 Changchun UP Optotech are associated (or correlated) with Guangdong Wens. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guangdong Wens Foodstuff has no effect on the direction of Changchun i.e., Changchun and Guangdong Wens go up and down completely randomly.
Pair Corralation between Changchun and Guangdong Wens
Assuming the 90 days trading horizon Changchun UP Optotech is expected to generate 1.69 times more return on investment than Guangdong Wens. However, Changchun is 1.69 times more volatile than Guangdong Wens Foodstuff. It trades about 0.09 of its potential returns per unit of risk. Guangdong Wens Foodstuff is currently generating about -0.03 per unit of risk. If you would invest 2,050 in Changchun UP Optotech on November 3, 2024 and sell it today you would earn a total of 1,679 from holding Changchun UP Optotech or generate 81.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Changchun UP Optotech vs. Guangdong Wens Foodstuff
Performance |
| Timeline |
| Changchun UP Optotech |
| Guangdong Wens Foodstuff |
Changchun and Guangdong Wens Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Changchun and Guangdong Wens
The main advantage of trading using opposite Changchun and Guangdong Wens positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Changchun position performs unexpectedly, Guangdong Wens 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 Guangdong Wens will offset losses from the drop in Guangdong Wens' long position.| Changchun vs. SSAW Hotels Resorts | Changchun vs. China Eastern Airlines | Changchun vs. Hefei Metalforming Mach | Changchun vs. Spring Airlines Co |
| Guangdong Wens vs. Ningbo Tip Rubber | Guangdong Wens vs. Shanghai Action Education | Guangdong Wens vs. China Asset Management | Guangdong Wens vs. China Publishing Media |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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