Correlation Between Zhonghang Electronic and New China
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By analyzing existing cross correlation between Zhonghang Electronic Measuring and New China Life, you can compare the effects of market volatilities on Zhonghang Electronic and New China 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 Zhonghang Electronic with a short position of New China. Check out your portfolio center. Please also check ongoing floating volatility patterns of Zhonghang Electronic and New China.
Diversification Opportunities for Zhonghang Electronic and New China
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Zhonghang and New is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Zhonghang Electronic Measuring and New China Life in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on New China Life and Zhonghang Electronic 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 Zhonghang Electronic Measuring are associated (or correlated) with New China. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of New China Life has no effect on the direction of Zhonghang Electronic i.e., Zhonghang Electronic and New China go up and down completely randomly.
Pair Corralation between Zhonghang Electronic and New China
Assuming the 90 days trading horizon Zhonghang Electronic Measuring is expected to generate 1.5 times more return on investment than New China. However, Zhonghang Electronic is 1.5 times more volatile than New China Life. It trades about 0.08 of its potential returns per unit of risk. New China Life is currently generating about 0.08 per unit of risk. If you would invest 3,950 in Zhonghang Electronic Measuring on November 7, 2024 and sell it today you would earn a total of 2,650 from holding Zhonghang Electronic Measuring or generate 67.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Zhonghang Electronic Measuring vs. New China Life
Performance |
| Timeline |
| Zhonghang Electronic |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| New China Life |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Zhonghang Electronic and New China Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Zhonghang Electronic and New China
The main advantage of trading using opposite Zhonghang Electronic and New China positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Zhonghang Electronic position performs unexpectedly, New China 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 New China will offset losses from the drop in New China's long position.The idea behind Zhonghang Electronic Measuring and New China Life 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.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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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