Correlation Between Chengdu Kanghua and Tianjin Yiyi
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By analyzing existing cross correlation between Chengdu Kanghua Biological and Tianjin Yiyi Hygiene, you can compare the effects of market volatilities on Chengdu Kanghua and Tianjin Yiyi 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 Chengdu Kanghua with a short position of Tianjin Yiyi. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chengdu Kanghua and Tianjin Yiyi.
Diversification Opportunities for Chengdu Kanghua and Tianjin Yiyi
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Chengdu and Tianjin is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Chengdu Kanghua Biological and Tianjin Yiyi Hygiene in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tianjin Yiyi Hygiene and Chengdu Kanghua 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 Chengdu Kanghua Biological are associated (or correlated) with Tianjin Yiyi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tianjin Yiyi Hygiene has no effect on the direction of Chengdu Kanghua i.e., Chengdu Kanghua and Tianjin Yiyi go up and down completely randomly.
Pair Corralation between Chengdu Kanghua and Tianjin Yiyi
Assuming the 90 days trading horizon Chengdu Kanghua Biological is expected to under-perform the Tianjin Yiyi. In addition to that, Chengdu Kanghua is 1.18 times more volatile than Tianjin Yiyi Hygiene. It trades about -0.02 of its total potential returns per unit of risk. Tianjin Yiyi Hygiene is currently generating about 0.01 per unit of volatility. If you would invest 1,754 in Tianjin Yiyi Hygiene on September 4, 2024 and sell it today you would lose (56.00) from holding Tianjin Yiyi Hygiene or give up 3.19% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Chengdu Kanghua Biological vs. Tianjin Yiyi Hygiene
Performance |
| Timeline |
| Chengdu Kanghua Biol |
| Tianjin Yiyi Hygiene |
Chengdu Kanghua and Tianjin Yiyi Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chengdu Kanghua and Tianjin Yiyi
The main advantage of trading using opposite Chengdu Kanghua and Tianjin Yiyi positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chengdu Kanghua position performs unexpectedly, Tianjin Yiyi 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 Tianjin Yiyi will offset losses from the drop in Tianjin Yiyi's long position.| Chengdu Kanghua vs. Sichuan Fulin Transportation | Chengdu Kanghua vs. Dazhong Transportation Group | Chengdu Kanghua vs. Sportsoul Co Ltd | Chengdu Kanghua vs. Sichuan Teway Food |
| Tianjin Yiyi vs. Nuode Investment Co | Tianjin Yiyi vs. Xilinmen Furniture Co | Tianjin Yiyi vs. Vohringer Home Technology | Tianjin Yiyi vs. Zhangjiagang Freetrade Science |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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