Correlation Between Contemporary Amperex and Huitong Construction
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By analyzing existing cross correlation between Contemporary Amperex Technology and Huitong Construction Group, you can compare the effects of market volatilities on Contemporary Amperex and Huitong Construction 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 Huitong Construction. Check out your portfolio center. Please also check ongoing floating volatility patterns of Contemporary Amperex and Huitong Construction.
Diversification Opportunities for Contemporary Amperex and Huitong Construction
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Contemporary and Huitong is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Contemporary Amperex Technolog and Huitong Construction Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Huitong Construction 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 Huitong Construction. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Huitong Construction has no effect on the direction of Contemporary Amperex i.e., Contemporary Amperex and Huitong Construction go up and down completely randomly.
Pair Corralation between Contemporary Amperex and Huitong Construction
Assuming the 90 days trading horizon Contemporary Amperex Technology is expected to generate 0.98 times more return on investment than Huitong Construction. However, Contemporary Amperex Technology is 1.02 times less risky than Huitong Construction. It trades about 0.02 of its potential returns per unit of risk. Huitong Construction Group is currently generating about -0.03 per unit of risk. If you would invest 22,531 in Contemporary Amperex Technology on August 29, 2024 and sell it today you would earn a total of 3,141 from holding Contemporary Amperex Technology or generate 13.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Contemporary Amperex Technolog vs. Huitong Construction Group
Performance |
| Timeline |
| Contemporary Amperex |
| Huitong Construction |
Contemporary Amperex and Huitong Construction Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Contemporary Amperex and Huitong Construction
The main advantage of trading using opposite Contemporary Amperex and Huitong Construction positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Contemporary Amperex position performs unexpectedly, Huitong Construction 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 Huitong Construction will offset losses from the drop in Huitong Construction's long position.The idea behind Contemporary Amperex Technology and Huitong Construction Group 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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