Correlation Between Shandong Hongchuang and Wanhua Chemical
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By analyzing existing cross correlation between Shandong Hongchuang Aluminum and Wanhua Chemical Group, you can compare the effects of market volatilities on Shandong Hongchuang and Wanhua Chemical 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 Shandong Hongchuang with a short position of Wanhua Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shandong Hongchuang and Wanhua Chemical.
Diversification Opportunities for Shandong Hongchuang and Wanhua Chemical
0.18 | Correlation Coefficient |
Average diversification
The 3 months correlation between Shandong and Wanhua is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Shandong Hongchuang Aluminum and Wanhua Chemical Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wanhua Chemical Group and Shandong Hongchuang 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 Shandong Hongchuang Aluminum are associated (or correlated) with Wanhua Chemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wanhua Chemical Group has no effect on the direction of Shandong Hongchuang i.e., Shandong Hongchuang and Wanhua Chemical go up and down completely randomly.
Pair Corralation between Shandong Hongchuang and Wanhua Chemical
Assuming the 90 days trading horizon Shandong Hongchuang Aluminum is expected to generate 2.02 times more return on investment than Wanhua Chemical. However, Shandong Hongchuang is 2.02 times more volatile than Wanhua Chemical Group. It trades about -0.04 of its potential returns per unit of risk. Wanhua Chemical Group is currently generating about -0.22 per unit of risk. If you would invest 794.00 in Shandong Hongchuang Aluminum on September 13, 2024 and sell it today you would lose (28.00) from holding Shandong Hongchuang Aluminum or give up 3.53% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Shandong Hongchuang Aluminum vs. Wanhua Chemical Group
Performance |
| Timeline |
| Shandong Hongchuang |
| Wanhua Chemical Group |
Shandong Hongchuang and Wanhua Chemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shandong Hongchuang and Wanhua Chemical
The main advantage of trading using opposite Shandong Hongchuang and Wanhua Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shandong Hongchuang position performs unexpectedly, Wanhua Chemical 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 Wanhua Chemical will offset losses from the drop in Wanhua Chemical's long position.| Shandong Hongchuang vs. Zijin Mining Group | Shandong Hongchuang vs. Wanhua Chemical Group | Shandong Hongchuang vs. Baoshan Iron Steel | Shandong Hongchuang vs. Shandong Gold Mining |
| Wanhua Chemical vs. Zijin Mining Group | Wanhua Chemical vs. Baoshan Iron Steel | Wanhua Chemical vs. Shandong Gold Mining | Wanhua Chemical vs. Rongsheng Petrochemical Co |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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