Correlation Between Linzhou Heavy and Chengdu Kanghua
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By analyzing existing cross correlation between Linzhou Heavy Machinery and Chengdu Kanghua Biological, you can compare the effects of market volatilities on Linzhou Heavy 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 Linzhou Heavy with a short position of Chengdu Kanghua. Check out your portfolio center. Please also check ongoing floating volatility patterns of Linzhou Heavy and Chengdu Kanghua.
Diversification Opportunities for Linzhou Heavy and Chengdu Kanghua
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Linzhou and Chengdu is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Linzhou Heavy Machinery 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 Linzhou Heavy 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 Linzhou Heavy Machinery 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 Linzhou Heavy i.e., Linzhou Heavy and Chengdu Kanghua go up and down completely randomly.
Pair Corralation between Linzhou Heavy and Chengdu Kanghua
Assuming the 90 days trading horizon Linzhou Heavy Machinery is expected to under-perform the Chengdu Kanghua. But the stock apears to be less risky and, when comparing its historical volatility, Linzhou Heavy Machinery is 1.03 times less risky than Chengdu Kanghua. The stock trades about -0.03 of its potential returns per unit of risk. The Chengdu Kanghua Biological is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 5,457 in Chengdu Kanghua Biological on January 24, 2025 and sell it today you would earn a total of 42.00 from holding Chengdu Kanghua Biological or generate 0.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Linzhou Heavy Machinery vs. Chengdu Kanghua Biological
Performance |
| Timeline |
| Linzhou Heavy Machinery |
| Chengdu Kanghua Biol |
Linzhou Heavy and Chengdu Kanghua Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Linzhou Heavy and Chengdu Kanghua
The main advantage of trading using opposite Linzhou Heavy and Chengdu Kanghua positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Linzhou Heavy 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.| Linzhou Heavy vs. Hubei Xingfa Chemicals | Linzhou Heavy vs. BMC Medical Co | Linzhou Heavy vs. Shanghai Broadband Technology | Linzhou Heavy vs. Medprin Regenerative Medical |
| Chengdu Kanghua vs. Tieling Newcity Investment | Chengdu Kanghua vs. Zhongrun Resources Investment | Chengdu Kanghua vs. Jiajia Food Group | Chengdu Kanghua vs. Youyou Foods 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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