Correlation Between Chongqing Shunbo and Lianhe Chemical
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By analyzing existing cross correlation between Chongqing Shunbo Aluminum and Lianhe Chemical Technology, you can compare the effects of market volatilities on Chongqing Shunbo and Lianhe Chemical 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 Chongqing Shunbo with a short position of Lianhe Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chongqing Shunbo and Lianhe Chemical.
Diversification Opportunities for Chongqing Shunbo and Lianhe Chemical
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Chongqing and Lianhe is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Chongqing Shunbo Aluminum and Lianhe Chemical Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lianhe Chemical Tech and Chongqing Shunbo 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 Chongqing Shunbo Aluminum are associated (or correlated) with Lianhe Chemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lianhe Chemical Tech has no effect on the direction of Chongqing Shunbo i.e., Chongqing Shunbo and Lianhe Chemical go up and down completely randomly.
Pair Corralation between Chongqing Shunbo and Lianhe Chemical
Assuming the 90 days trading horizon Chongqing Shunbo Aluminum is expected to under-perform the Lianhe Chemical. But the stock apears to be less risky and, when comparing its historical volatility, Chongqing Shunbo Aluminum is 1.29 times less risky than Lianhe Chemical. The stock trades about -0.04 of its potential returns per unit of risk. The Lianhe Chemical Technology is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 564.00 in Lianhe Chemical Technology on October 21, 2024 and sell it today you would earn a total of 12.00 from holding Lianhe Chemical Technology or generate 2.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Chongqing Shunbo Aluminum vs. Lianhe Chemical Technology
Performance |
| Timeline |
| Chongqing Shunbo Aluminum |
| Lianhe Chemical Tech |
Chongqing Shunbo and Lianhe Chemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chongqing Shunbo and Lianhe Chemical
The main advantage of trading using opposite Chongqing Shunbo and Lianhe Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chongqing Shunbo position performs unexpectedly, Lianhe Chemical 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 Lianhe Chemical will offset losses from the drop in Lianhe Chemical's long position.| Chongqing Shunbo vs. Guotai Epoint Software | Chongqing Shunbo vs. China Mobile Limited | Chongqing Shunbo vs. Dongfeng Automobile Co | Chongqing Shunbo vs. Runjian Communication Co |
| Lianhe Chemical vs. Anhui Transport Consulting | Lianhe Chemical vs. Aluminum Corp of | Lianhe Chemical vs. Tianshan Aluminum Group | Lianhe Chemical vs. Chongqing Shunbo Aluminum |
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 CEOs Directory module to screen CEOs from public companies around the world.
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