Correlation Between Chongqing Changan and Hangzhou Huawang
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By analyzing existing cross correlation between Chongqing Changan Automobile and Hangzhou Huawang New, you can compare the effects of market volatilities on Chongqing Changan and Hangzhou Huawang 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 Hangzhou Huawang. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chongqing Changan and Hangzhou Huawang.
Diversification Opportunities for Chongqing Changan and Hangzhou Huawang
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Chongqing and Hangzhou is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Chongqing Changan Automobile and Hangzhou Huawang New in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hangzhou Huawang New 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 Hangzhou Huawang. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hangzhou Huawang New has no effect on the direction of Chongqing Changan i.e., Chongqing Changan and Hangzhou Huawang go up and down completely randomly.
Pair Corralation between Chongqing Changan and Hangzhou Huawang
Assuming the 90 days trading horizon Chongqing Changan Automobile is expected to generate 1.08 times more return on investment than Hangzhou Huawang. However, Chongqing Changan is 1.08 times more volatile than Hangzhou Huawang New. It trades about -0.05 of its potential returns per unit of risk. Hangzhou Huawang New is currently generating about -0.11 per unit of risk. If you would invest 376.00 in Chongqing Changan Automobile on August 25, 2024 and sell it today you would lose (11.00) from holding Chongqing Changan Automobile or give up 2.93% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Chongqing Changan Automobile vs. Hangzhou Huawang New
Performance |
| Timeline |
| Chongqing Changan |
| Hangzhou Huawang New |
Chongqing Changan and Hangzhou Huawang Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chongqing Changan and Hangzhou Huawang
The main advantage of trading using opposite Chongqing Changan and Hangzhou Huawang positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chongqing Changan position performs unexpectedly, Hangzhou Huawang 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 Hangzhou Huawang will offset losses from the drop in Hangzhou Huawang's long position.| Chongqing Changan vs. Shenyang Huitian Thermal | Chongqing Changan vs. Longmaster Information Tech | Chongqing Changan vs. Yonyou Auto Information | Chongqing Changan vs. Guangzhou Ruoyuchen Information |
| Hangzhou Huawang vs. Shanghai Rongtai Health | Hangzhou Huawang vs. Nantong Haixing Electronics | Hangzhou Huawang vs. Unigroup Guoxin Microelectronics | Hangzhou Huawang vs. Integrated Electronic Systems |
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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