Correlation Between Changchun and Wuhan Yangtze
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By analyzing existing cross correlation between Changchun UP Optotech and Wuhan Yangtze Communication, you can compare the effects of market volatilities on Changchun and Wuhan Yangtze 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 Wuhan Yangtze. Check out your portfolio center. Please also check ongoing floating volatility patterns of Changchun and Wuhan Yangtze.
Diversification Opportunities for Changchun and Wuhan Yangtze
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Changchun and Wuhan is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Changchun UP Optotech and Wuhan Yangtze Communication in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wuhan Yangtze Commun 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 Wuhan Yangtze. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wuhan Yangtze Commun has no effect on the direction of Changchun i.e., Changchun and Wuhan Yangtze go up and down completely randomly.
Pair Corralation between Changchun and Wuhan Yangtze
Assuming the 90 days trading horizon Changchun is expected to generate 2.57 times less return on investment than Wuhan Yangtze. But when comparing it to its historical volatility, Changchun UP Optotech is 1.12 times less risky than Wuhan Yangtze. It trades about 0.16 of its potential returns per unit of risk. Wuhan Yangtze Communication is currently generating about 0.37 of returns per unit of risk over similar time horizon. If you would invest 1,866 in Wuhan Yangtze Communication on August 25, 2024 and sell it today you would earn a total of 1,001 from holding Wuhan Yangtze Communication or generate 53.64% 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. Wuhan Yangtze Communication
Performance |
| Timeline |
| Changchun UP Optotech |
| Wuhan Yangtze Commun |
Changchun and Wuhan Yangtze Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Changchun and Wuhan Yangtze
The main advantage of trading using opposite Changchun and Wuhan Yangtze positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Changchun position performs unexpectedly, Wuhan Yangtze 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 Wuhan Yangtze will offset losses from the drop in Wuhan Yangtze's long position.| Changchun vs. Chengdu Kanghua Biological | Changchun vs. Beijing Wantai Biological | Changchun vs. Suzhou Novoprotein Scientific | Changchun vs. Aluminum Corp of |
| Wuhan Yangtze vs. Ming Yang Smart | Wuhan Yangtze vs. 159005 | Wuhan Yangtze vs. Loctek Ergonomic Technology | Wuhan Yangtze vs. Xiamen East Asia |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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