Correlation Between Beijing HuaYuanYiTong and Citic Guoan
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By analyzing existing cross correlation between Beijing HuaYuanYiTong Thermal and Citic Guoan Wine, you can compare the effects of market volatilities on Beijing HuaYuanYiTong and Citic Guoan 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 Beijing HuaYuanYiTong with a short position of Citic Guoan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Beijing HuaYuanYiTong and Citic Guoan.
Diversification Opportunities for Beijing HuaYuanYiTong and Citic Guoan
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Beijing and Citic is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Beijing HuaYuanYiTong Thermal and Citic Guoan Wine in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Citic Guoan Wine and Beijing HuaYuanYiTong 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 Beijing HuaYuanYiTong Thermal are associated (or correlated) with Citic Guoan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Citic Guoan Wine has no effect on the direction of Beijing HuaYuanYiTong i.e., Beijing HuaYuanYiTong and Citic Guoan go up and down completely randomly.
Pair Corralation between Beijing HuaYuanYiTong and Citic Guoan
Assuming the 90 days trading horizon Beijing HuaYuanYiTong Thermal is expected to generate 1.29 times more return on investment than Citic Guoan. However, Beijing HuaYuanYiTong is 1.29 times more volatile than Citic Guoan Wine. It trades about 0.02 of its potential returns per unit of risk. Citic Guoan Wine is currently generating about -0.03 per unit of risk. If you would invest 916.00 in Beijing HuaYuanYiTong Thermal on October 29, 2024 and sell it today you would earn a total of 23.00 from holding Beijing HuaYuanYiTong Thermal or generate 2.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Beijing HuaYuanYiTong Thermal vs. Citic Guoan Wine
Performance |
| Timeline |
| Beijing HuaYuanYiTong |
| Citic Guoan Wine |
Beijing HuaYuanYiTong and Citic Guoan Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Beijing HuaYuanYiTong and Citic Guoan
The main advantage of trading using opposite Beijing HuaYuanYiTong and Citic Guoan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Beijing HuaYuanYiTong position performs unexpectedly, Citic Guoan 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 Citic Guoan will offset losses from the drop in Citic Guoan's long position.The idea behind Beijing HuaYuanYiTong Thermal and Citic Guoan Wine 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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