Correlation Between Guangzhou Shangpin and Chongqing Changan
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By analyzing existing cross correlation between Guangzhou Shangpin Home and Chongqing Changan Automobile, you can compare the effects of market volatilities on Guangzhou Shangpin 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 Guangzhou Shangpin with a short position of Chongqing Changan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Guangzhou Shangpin and Chongqing Changan.
Diversification Opportunities for Guangzhou Shangpin and Chongqing Changan
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Guangzhou and Chongqing is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Guangzhou Shangpin Home and Chongqing Changan Automobile in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chongqing Changan and Guangzhou Shangpin 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 Guangzhou Shangpin Home 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 Guangzhou Shangpin i.e., Guangzhou Shangpin and Chongqing Changan go up and down completely randomly.
Pair Corralation between Guangzhou Shangpin and Chongqing Changan
Assuming the 90 days trading horizon Guangzhou Shangpin Home is expected to generate 0.76 times more return on investment than Chongqing Changan. However, Guangzhou Shangpin Home is 1.31 times less risky than Chongqing Changan. It trades about 0.3 of its potential returns per unit of risk. Chongqing Changan Automobile is currently generating about -0.04 per unit of risk. If you would invest 1,293 in Guangzhou Shangpin Home on September 3, 2024 and sell it today you would earn a total of 190.00 from holding Guangzhou Shangpin Home or generate 14.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Guangzhou Shangpin Home vs. Chongqing Changan Automobile
Performance |
| Timeline |
| Guangzhou Shangpin Home |
| Chongqing Changan |
Guangzhou Shangpin and Chongqing Changan Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Guangzhou Shangpin and Chongqing Changan
The main advantage of trading using opposite Guangzhou Shangpin and Chongqing Changan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Guangzhou Shangpin 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.| Guangzhou Shangpin vs. PetroChina Co Ltd | Guangzhou Shangpin vs. China Mobile Limited | Guangzhou Shangpin vs. Industrial and Commercial | Guangzhou Shangpin vs. China Life Insurance |
| Chongqing Changan vs. Shandong Homey Aquatic | Chongqing Changan vs. Guangzhou Shangpin Home | Chongqing Changan vs. Hainan Mining Co | Chongqing Changan vs. Guangdong Jingyi Metal |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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