Correlation Between Hubeiyichang Transportation and Fujian Wanchen
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By analyzing existing cross correlation between Hubeiyichang Transportation Group and Fujian Wanchen Biotechnology, you can compare the effects of market volatilities on Hubeiyichang Transportation and Fujian Wanchen 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 Hubeiyichang Transportation with a short position of Fujian Wanchen. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hubeiyichang Transportation and Fujian Wanchen.
Diversification Opportunities for Hubeiyichang Transportation and Fujian Wanchen
-0.21 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Hubeiyichang and Fujian is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Hubeiyichang Transportation Gr and Fujian Wanchen Biotechnology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fujian Wanchen Biote and Hubeiyichang Transportation 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 Hubeiyichang Transportation Group are associated (or correlated) with Fujian Wanchen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fujian Wanchen Biote has no effect on the direction of Hubeiyichang Transportation i.e., Hubeiyichang Transportation and Fujian Wanchen go up and down completely randomly.
Pair Corralation between Hubeiyichang Transportation and Fujian Wanchen
Assuming the 90 days trading horizon Hubeiyichang Transportation Group is expected to under-perform the Fujian Wanchen. But the stock apears to be less risky and, when comparing its historical volatility, Hubeiyichang Transportation Group is 1.98 times less risky than Fujian Wanchen. The stock trades about -0.12 of its potential returns per unit of risk. The Fujian Wanchen Biotechnology is currently generating about 0.39 of returns per unit of risk over similar time horizon. If you would invest 7,678 in Fujian Wanchen Biotechnology on October 28, 2024 and sell it today you would earn a total of 2,401 from holding Fujian Wanchen Biotechnology or generate 31.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hubeiyichang Transportation Gr vs. Fujian Wanchen Biotechnology
Performance |
| Timeline |
| Hubeiyichang Transportation |
| Fujian Wanchen Biote |
Hubeiyichang Transportation and Fujian Wanchen Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hubeiyichang Transportation and Fujian Wanchen
The main advantage of trading using opposite Hubeiyichang Transportation and Fujian Wanchen positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hubeiyichang Transportation position performs unexpectedly, Fujian Wanchen 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 Fujian Wanchen will offset losses from the drop in Fujian Wanchen's long position.The idea behind Hubeiyichang Transportation Group and Fujian Wanchen Biotechnology 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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