Correlation Between Contemporary Amperex and Wuxi Lead
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By analyzing existing cross correlation between Contemporary Amperex Technology and Wuxi Lead Auto, you can compare the effects of market volatilities on Contemporary Amperex and Wuxi Lead 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 Wuxi Lead. Check out your portfolio center. Please also check ongoing floating volatility patterns of Contemporary Amperex and Wuxi Lead.
Diversification Opportunities for Contemporary Amperex and Wuxi Lead
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Contemporary and Wuxi is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Contemporary Amperex Technolog and Wuxi Lead Auto in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wuxi Lead Auto 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 Wuxi Lead. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wuxi Lead Auto has no effect on the direction of Contemporary Amperex i.e., Contemporary Amperex and Wuxi Lead go up and down completely randomly.
Pair Corralation between Contemporary Amperex and Wuxi Lead
Assuming the 90 days trading horizon Contemporary Amperex is expected to generate 25.78 times less return on investment than Wuxi Lead. But when comparing it to its historical volatility, Contemporary Amperex Technology is 2.55 times less risky than Wuxi Lead. It trades about 0.01 of its potential returns per unit of risk. Wuxi Lead Auto is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 1,968 in Wuxi Lead Auto on August 29, 2024 and sell it today you would earn a total of 347.00 from holding Wuxi Lead Auto or generate 17.63% 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. Wuxi Lead Auto
Performance |
| Timeline |
| Contemporary Amperex |
| Wuxi Lead Auto |
Contemporary Amperex and Wuxi Lead Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Contemporary Amperex and Wuxi Lead
The main advantage of trading using opposite Contemporary Amperex and Wuxi Lead positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Contemporary Amperex position performs unexpectedly, Wuxi Lead 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 Wuxi Lead will offset losses from the drop in Wuxi Lead's long position.The idea behind Contemporary Amperex Technology and Wuxi Lead Auto 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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