Correlation Between Contemporary Amperex and Shenwu Energy
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By analyzing existing cross correlation between Contemporary Amperex Technology and Shenwu Energy Saving, you can compare the effects of market volatilities on Contemporary Amperex and Shenwu Energy 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 Contemporary Amperex with a short position of Shenwu Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Contemporary Amperex and Shenwu Energy.
Diversification Opportunities for Contemporary Amperex and Shenwu Energy
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Contemporary and Shenwu is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Contemporary Amperex Technolog and Shenwu Energy Saving in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shenwu Energy Saving and Contemporary Amperex 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 Contemporary Amperex Technology are associated (or correlated) with Shenwu Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shenwu Energy Saving has no effect on the direction of Contemporary Amperex i.e., Contemporary Amperex and Shenwu Energy go up and down completely randomly.
Pair Corralation between Contemporary Amperex and Shenwu Energy
Assuming the 90 days trading horizon Contemporary Amperex Technology is expected to generate 0.74 times more return on investment than Shenwu Energy. However, Contemporary Amperex Technology is 1.35 times less risky than Shenwu Energy. It trades about 0.03 of its potential returns per unit of risk. Shenwu Energy Saving is currently generating about 0.0 per unit of risk. If you would invest 22,327 in Contemporary Amperex Technology on August 28, 2024 and sell it today you would earn a total of 4,083 from holding Contemporary Amperex Technology or generate 18.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Contemporary Amperex Technolog vs. Shenwu Energy Saving
Performance |
| Timeline |
| Contemporary Amperex |
| Shenwu Energy Saving |
Contemporary Amperex and Shenwu Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Contemporary Amperex and Shenwu Energy
The main advantage of trading using opposite Contemporary Amperex and Shenwu Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Contemporary Amperex position performs unexpectedly, Shenwu Energy 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 Shenwu Energy will offset losses from the drop in Shenwu Energy's long position.The idea behind Contemporary Amperex Technology and Shenwu Energy Saving 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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