Correlation Between Chengdu Kanghua and Wuxi Chemical
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By analyzing existing cross correlation between Chengdu Kanghua Biological and Wuxi Chemical Equipment, you can compare the effects of market volatilities on Chengdu Kanghua and Wuxi Chemical 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 Wuxi Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chengdu Kanghua and Wuxi Chemical.
Diversification Opportunities for Chengdu Kanghua and Wuxi Chemical
0.18 | Correlation Coefficient |
Average diversification
The 3 months correlation between Chengdu and Wuxi is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Chengdu Kanghua Biological and Wuxi Chemical Equipment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wuxi Chemical Equipment 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 Wuxi Chemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wuxi Chemical Equipment has no effect on the direction of Chengdu Kanghua i.e., Chengdu Kanghua and Wuxi Chemical go up and down completely randomly.
Pair Corralation between Chengdu Kanghua and Wuxi Chemical
Assuming the 90 days trading horizon Chengdu Kanghua is expected to generate 1.09 times less return on investment than Wuxi Chemical. In addition to that, Chengdu Kanghua is 1.71 times more volatile than Wuxi Chemical Equipment. It trades about 0.11 of its total potential returns per unit of risk. Wuxi Chemical Equipment is currently generating about 0.21 per unit of volatility. If you would invest 2,630 in Wuxi Chemical Equipment on September 13, 2024 and sell it today you would earn a total of 971.00 from holding Wuxi Chemical Equipment or generate 36.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Chengdu Kanghua Biological vs. Wuxi Chemical Equipment
Performance |
| Timeline |
| Chengdu Kanghua Biol |
| Wuxi Chemical Equipment |
Chengdu Kanghua and Wuxi Chemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chengdu Kanghua and Wuxi Chemical
The main advantage of trading using opposite Chengdu Kanghua and Wuxi Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chengdu Kanghua position performs unexpectedly, Wuxi Chemical 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 Chemical will offset losses from the drop in Wuxi Chemical's long position.| Chengdu Kanghua vs. Bank of Suzhou | Chengdu Kanghua vs. Peoples Insurance of | Chengdu Kanghua vs. Yonyou Auto Information | Chengdu Kanghua vs. Longmaster Information Tech |
| Wuxi Chemical vs. Zhongshan Public Utilities | Wuxi Chemical vs. Dongfeng Automobile Co | Wuxi Chemical vs. Zhongtong Guomai Communication | Wuxi Chemical vs. Wuhan Yangtze Communication |
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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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