Correlation Between Chengdu Xinzhu and Beijing HuaYuanYiTong
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By analyzing existing cross correlation between Chengdu Xinzhu RoadBridge and Beijing HuaYuanYiTong Thermal, you can compare the effects of market volatilities on Chengdu Xinzhu and Beijing HuaYuanYiTong 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 Chengdu Xinzhu with a short position of Beijing HuaYuanYiTong. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chengdu Xinzhu and Beijing HuaYuanYiTong.
Diversification Opportunities for Chengdu Xinzhu and Beijing HuaYuanYiTong
-0.13 | Correlation Coefficient |
Good diversification
The 3 months correlation between Chengdu and Beijing is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Chengdu Xinzhu RoadBridge and Beijing HuaYuanYiTong Thermal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Beijing HuaYuanYiTong and Chengdu Xinzhu 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 Chengdu Xinzhu RoadBridge are associated (or correlated) with Beijing HuaYuanYiTong. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Beijing HuaYuanYiTong has no effect on the direction of Chengdu Xinzhu i.e., Chengdu Xinzhu and Beijing HuaYuanYiTong go up and down completely randomly.
Pair Corralation between Chengdu Xinzhu and Beijing HuaYuanYiTong
Assuming the 90 days trading horizon Chengdu Xinzhu is expected to generate 1.62 times less return on investment than Beijing HuaYuanYiTong. But when comparing it to its historical volatility, Chengdu Xinzhu RoadBridge is 1.12 times less risky than Beijing HuaYuanYiTong. It trades about 0.01 of its potential returns per unit of risk. Beijing HuaYuanYiTong Thermal is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 898.00 in Beijing HuaYuanYiTong Thermal on November 7, 2024 and sell it today you would earn a total of 41.00 from holding Beijing HuaYuanYiTong Thermal or generate 4.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Chengdu Xinzhu RoadBridge vs. Beijing HuaYuanYiTong Thermal
Performance |
| Timeline |
| Chengdu Xinzhu RoadBridge |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Weak
| Beijing HuaYuanYiTong |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Chengdu Xinzhu and Beijing HuaYuanYiTong Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chengdu Xinzhu and Beijing HuaYuanYiTong
The main advantage of trading using opposite Chengdu Xinzhu and Beijing HuaYuanYiTong positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chengdu Xinzhu position performs unexpectedly, Beijing HuaYuanYiTong 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 Beijing HuaYuanYiTong will offset losses from the drop in Beijing HuaYuanYiTong's long position.The idea behind Chengdu Xinzhu RoadBridge and Beijing HuaYuanYiTong Thermal pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.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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