Correlation Between Fujian Longzhou and Weihai Guangwei
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By analyzing existing cross correlation between Fujian Longzhou Transportation and Weihai Guangwei Composites, you can compare the effects of market volatilities on Fujian Longzhou and Weihai Guangwei 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 Fujian Longzhou with a short position of Weihai Guangwei. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fujian Longzhou and Weihai Guangwei.
Diversification Opportunities for Fujian Longzhou and Weihai Guangwei
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Fujian and Weihai is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Fujian Longzhou Transportation and Weihai Guangwei Composites in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Weihai Guangwei Comp and Fujian Longzhou 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 Fujian Longzhou Transportation are associated (or correlated) with Weihai Guangwei. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Weihai Guangwei Comp has no effect on the direction of Fujian Longzhou i.e., Fujian Longzhou and Weihai Guangwei go up and down completely randomly.
Pair Corralation between Fujian Longzhou and Weihai Guangwei
Assuming the 90 days trading horizon Fujian Longzhou is expected to generate 5.91 times less return on investment than Weihai Guangwei. In addition to that, Fujian Longzhou is 1.47 times more volatile than Weihai Guangwei Composites. It trades about 0.01 of its total potential returns per unit of risk. Weihai Guangwei Composites is currently generating about 0.07 per unit of volatility. If you would invest 2,394 in Weihai Guangwei Composites on September 14, 2024 and sell it today you would earn a total of 1,123 from holding Weihai Guangwei Composites or generate 46.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fujian Longzhou Transportation vs. Weihai Guangwei Composites
Performance |
| Timeline |
| Fujian Longzhou Tran |
| Weihai Guangwei Comp |
Fujian Longzhou and Weihai Guangwei Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fujian Longzhou and Weihai Guangwei
The main advantage of trading using opposite Fujian Longzhou and Weihai Guangwei positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fujian Longzhou position performs unexpectedly, Weihai Guangwei 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 Weihai Guangwei will offset losses from the drop in Weihai Guangwei's long position.| Fujian Longzhou vs. New China Life | Fujian Longzhou vs. Ming Yang Smart | Fujian Longzhou vs. 159681 | Fujian Longzhou vs. 159005 |
| Weihai Guangwei vs. Nanjing Putian Telecommunications | Weihai Guangwei vs. Beijing Sanyuan Foods | Weihai Guangwei vs. Shenzhen Kexin Communication | Weihai Guangwei vs. Qingdao 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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