Correlation Between Aba Chemicals and Chongqing Changan
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By analyzing existing cross correlation between Aba Chemicals Corp and Chongqing Changan Automobile, you can compare the effects of market volatilities on Aba Chemicals and Chongqing Changan 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 Aba Chemicals with a short position of Chongqing Changan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aba Chemicals and Chongqing Changan.
Diversification Opportunities for Aba Chemicals and Chongqing Changan
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Aba and Chongqing is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Aba Chemicals Corp and Chongqing Changan Automobile in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chongqing Changan and Aba Chemicals 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 Aba Chemicals Corp are associated (or correlated) with Chongqing Changan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chongqing Changan has no effect on the direction of Aba Chemicals i.e., Aba Chemicals and Chongqing Changan go up and down completely randomly.
Pair Corralation between Aba Chemicals and Chongqing Changan
Assuming the 90 days trading horizon Aba Chemicals Corp is expected to generate 1.86 times more return on investment than Chongqing Changan. However, Aba Chemicals is 1.86 times more volatile than Chongqing Changan Automobile. It trades about 0.05 of its potential returns per unit of risk. Chongqing Changan Automobile is currently generating about -0.01 per unit of risk. If you would invest 535.00 in Aba Chemicals Corp on November 4, 2024 and sell it today you would earn a total of 80.00 from holding Aba Chemicals Corp or generate 14.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Aba Chemicals Corp vs. Chongqing Changan Automobile
Performance |
| Timeline |
| Aba Chemicals Corp |
| Chongqing Changan |
Aba Chemicals and Chongqing Changan Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aba Chemicals and Chongqing Changan
The main advantage of trading using opposite Aba Chemicals and Chongqing Changan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aba Chemicals position performs unexpectedly, Chongqing Changan 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 Chongqing Changan will offset losses from the drop in Chongqing Changan's long position.| Aba Chemicals vs. Shenzhen AV Display Co | Aba Chemicals vs. Sportsoul Co Ltd | Aba Chemicals vs. Glodon Software Co | Aba Chemicals vs. Lander Sports Development |
| Chongqing Changan vs. Yoantion Industrial IncLtd | Chongqing Changan vs. Bosera CMSK Industrial | Chongqing Changan vs. Malion New Materials | Chongqing Changan vs. Western Metal Materials |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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