Correlation Between Changchun and China Everbright
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By analyzing existing cross correlation between Changchun UP Optotech and China Everbright Bank, you can compare the effects of market volatilities on Changchun 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 Changchun with a short position of China Everbright. Check out your portfolio center. Please also check ongoing floating volatility patterns of Changchun and China Everbright.
Diversification Opportunities for Changchun and China Everbright
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Changchun and China is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Changchun UP Optotech 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 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 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 Changchun i.e., Changchun and China Everbright go up and down completely randomly.
Pair Corralation between Changchun and China Everbright
Assuming the 90 days trading horizon Changchun UP Optotech is expected to generate 2.66 times more return on investment than China Everbright. However, Changchun is 2.66 times more volatile than China Everbright Bank. It trades about 0.03 of its potential returns per unit of risk. China Everbright Bank is currently generating about 0.08 per unit of risk. If you would invest 3,741 in Changchun UP Optotech on September 14, 2024 and sell it today you would earn a total of 553.00 from holding Changchun UP Optotech or generate 14.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.62% |
| Values | Daily Returns |
Changchun UP Optotech vs. China Everbright Bank
Performance |
| Timeline |
| Changchun UP Optotech |
| China Everbright Bank |
Changchun and China Everbright Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Changchun and China Everbright
The main advantage of trading using opposite Changchun and China Everbright positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Changchun 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.| Changchun vs. China Life Insurance | Changchun vs. Cinda Securities Co | Changchun vs. Piotech Inc A | Changchun vs. Dongxing Sec Co |
| China Everbright vs. CIMC Vehicles Co | China Everbright vs. Zhejiang Qianjiang Motorcycle | China Everbright vs. Shenzhen Bioeasy Biotechnology | China Everbright vs. Ningbo Fangzheng Automobile |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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