Correlation Between Longxing Chemical and Wuxi Chemical
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By analyzing existing cross correlation between Longxing Chemical Stock and Wuxi Chemical Equipment, you can compare the effects of market volatilities on Longxing Chemical and Wuxi 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 Longxing Chemical with a short position of Wuxi Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Longxing Chemical and Wuxi Chemical.
Diversification Opportunities for Longxing Chemical and Wuxi Chemical
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Longxing and Wuxi is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Longxing Chemical Stock and Wuxi Chemical Equipment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wuxi Chemical Equipment and Longxing Chemical 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 Longxing Chemical Stock are associated (or correlated) with Wuxi Chemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wuxi Chemical Equipment has no effect on the direction of Longxing Chemical i.e., Longxing Chemical and Wuxi Chemical go up and down completely randomly.
Pair Corralation between Longxing Chemical and Wuxi Chemical
Assuming the 90 days trading horizon Longxing Chemical Stock is expected to generate 0.9 times more return on investment than Wuxi Chemical. However, Longxing Chemical Stock is 1.11 times less risky than Wuxi Chemical. It trades about 0.02 of its potential returns per unit of risk. Wuxi Chemical Equipment is currently generating about 0.0 per unit of risk. If you would invest 515.00 in Longxing Chemical Stock on September 3, 2024 and sell it today you would earn a total of 53.00 from holding Longxing Chemical Stock or generate 10.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Longxing Chemical Stock vs. Wuxi Chemical Equipment
Performance |
| Timeline |
| Longxing Chemical Stock |
| Wuxi Chemical Equipment |
Longxing Chemical and Wuxi Chemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Longxing Chemical and Wuxi Chemical
The main advantage of trading using opposite Longxing Chemical and Wuxi Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Longxing Chemical position performs unexpectedly, Wuxi 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 Wuxi Chemical will offset losses from the drop in Wuxi Chemical's long position.| Longxing Chemical vs. Guangdong Liantai Environmental | Longxing Chemical vs. Hengli Industrial Development | Longxing Chemical vs. Lingyuan Iron Steel | Longxing Chemical vs. Dongjiang Environmental Co |
| Wuxi Chemical vs. CITIC Guoan Information | Wuxi Chemical vs. Shenzhen SDG Information | Wuxi Chemical vs. Kangxin New Materials | Wuxi Chemical vs. Jinsanjiang Silicon Material |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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