Correlation Between Tongding Interconnection and Chengdu Kanghua
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By analyzing existing cross correlation between Tongding Interconnection Information and Chengdu Kanghua Biological, you can compare the effects of market volatilities on Tongding Interconnection and Chengdu Kanghua 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 Tongding Interconnection with a short position of Chengdu Kanghua. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tongding Interconnection and Chengdu Kanghua.
Diversification Opportunities for Tongding Interconnection and Chengdu Kanghua
0.01 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Tongding and Chengdu is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Tongding Interconnection Infor and Chengdu Kanghua Biological in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chengdu Kanghua Biol and Tongding Interconnection 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 Tongding Interconnection Information are associated (or correlated) with Chengdu Kanghua. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chengdu Kanghua Biol has no effect on the direction of Tongding Interconnection i.e., Tongding Interconnection and Chengdu Kanghua go up and down completely randomly.
Pair Corralation between Tongding Interconnection and Chengdu Kanghua
Assuming the 90 days trading horizon Tongding Interconnection Information is expected to generate 3.1 times more return on investment than Chengdu Kanghua. However, Tongding Interconnection is 3.1 times more volatile than Chengdu Kanghua Biological. It trades about 0.13 of its potential returns per unit of risk. Chengdu Kanghua Biological is currently generating about -0.03 per unit of risk. If you would invest 417.00 in Tongding Interconnection Information on November 4, 2024 and sell it today you would earn a total of 39.00 from holding Tongding Interconnection Information or generate 9.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Tongding Interconnection Infor vs. Chengdu Kanghua Biological
Performance |
| Timeline |
| Tongding Interconnection |
| Chengdu Kanghua Biol |
Tongding Interconnection and Chengdu Kanghua Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tongding Interconnection and Chengdu Kanghua
The main advantage of trading using opposite Tongding Interconnection and Chengdu Kanghua positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tongding Interconnection position performs unexpectedly, Chengdu Kanghua 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 Chengdu Kanghua will offset losses from the drop in Chengdu Kanghua's long position.The idea behind Tongding Interconnection Information and Chengdu Kanghua Biological 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.
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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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