Correlation Between Guangzhou KDT and Weichai Heavy
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By analyzing existing cross correlation between Guangzhou KDT Machinery and Weichai Heavy Machinery, you can compare the effects of market volatilities on Guangzhou KDT and Weichai Heavy 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 Guangzhou KDT with a short position of Weichai Heavy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Guangzhou KDT and Weichai Heavy.
Diversification Opportunities for Guangzhou KDT and Weichai Heavy
-0.45 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Guangzhou and Weichai is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Guangzhou KDT Machinery and Weichai Heavy Machinery in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Weichai Heavy Machinery and Guangzhou KDT 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 Guangzhou KDT Machinery are associated (or correlated) with Weichai Heavy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Weichai Heavy Machinery has no effect on the direction of Guangzhou KDT i.e., Guangzhou KDT and Weichai Heavy go up and down completely randomly.
Pair Corralation between Guangzhou KDT and Weichai Heavy
Assuming the 90 days trading horizon Guangzhou KDT is expected to generate 2.65 times less return on investment than Weichai Heavy. But when comparing it to its historical volatility, Guangzhou KDT Machinery is 1.33 times less risky than Weichai Heavy. It trades about 0.03 of its potential returns per unit of risk. Weichai Heavy Machinery is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 972.00 in Weichai Heavy Machinery on October 27, 2024 and sell it today you would earn a total of 1,203 from holding Weichai Heavy Machinery or generate 123.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Guangzhou KDT Machinery vs. Weichai Heavy Machinery
Performance |
| Timeline |
| Guangzhou KDT Machinery |
| Weichai Heavy Machinery |
Guangzhou KDT and Weichai Heavy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Guangzhou KDT and Weichai Heavy
The main advantage of trading using opposite Guangzhou KDT and Weichai Heavy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Guangzhou KDT position performs unexpectedly, Weichai Heavy 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 Weichai Heavy will offset losses from the drop in Weichai Heavy's long position.| Guangzhou KDT vs. PetroChina Co Ltd | Guangzhou KDT vs. Industrial and Commercial | Guangzhou KDT vs. China Petroleum Chemical | Guangzhou KDT vs. China Construction Bank |
| Weichai Heavy vs. Ming Yang Smart | Weichai Heavy vs. 159681 | Weichai Heavy vs. 159005 | Weichai Heavy vs. Loctek Ergonomic Technology |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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