Correlation Between Chongqing Changan and China Fund
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By analyzing existing cross correlation between Chongqing Changan Automobile and China Fund Management, you can compare the effects of market volatilities on Chongqing Changan and China Fund 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 Changan with a short position of China Fund. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chongqing Changan and China Fund.
Diversification Opportunities for Chongqing Changan and China Fund
-0.44 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Chongqing and China is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Chongqing Changan Automobile and China Fund Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Fund Management and Chongqing Changan 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 Changan Automobile are associated (or correlated) with China Fund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Fund Management has no effect on the direction of Chongqing Changan i.e., Chongqing Changan and China Fund go up and down completely randomly.
Pair Corralation between Chongqing Changan and China Fund
Assuming the 90 days trading horizon Chongqing Changan Automobile is expected to generate 2.74 times more return on investment than China Fund. However, Chongqing Changan is 2.74 times more volatile than China Fund Management. It trades about 0.04 of its potential returns per unit of risk. China Fund Management is currently generating about 0.06 per unit of risk. If you would invest 304.00 in Chongqing Changan Automobile on August 29, 2024 and sell it today you would earn a total of 60.00 from holding Chongqing Changan Automobile or generate 19.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Chongqing Changan Automobile vs. China Fund Management
Performance |
| Timeline |
| Chongqing Changan |
| China Fund Management |
Chongqing Changan and China Fund Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chongqing Changan and China Fund
The main advantage of trading using opposite Chongqing Changan and China Fund positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chongqing Changan position performs unexpectedly, China Fund 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 China Fund will offset losses from the drop in China Fund's long position.The idea behind Chongqing Changan Automobile and China Fund Management 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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