Correlation Between Chengdu Kanghua and Linzhou Heavy
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By analyzing existing cross correlation between Chengdu Kanghua Biological and Linzhou Heavy Machinery, you can compare the effects of market volatilities on Chengdu Kanghua and Linzhou Heavy 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 Linzhou Heavy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chengdu Kanghua and Linzhou Heavy.
Diversification Opportunities for Chengdu Kanghua and Linzhou Heavy
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Chengdu and Linzhou is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Chengdu Kanghua Biological and Linzhou Heavy Machinery in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Linzhou Heavy Machinery 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 Linzhou Heavy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Linzhou Heavy Machinery has no effect on the direction of Chengdu Kanghua i.e., Chengdu Kanghua and Linzhou Heavy go up and down completely randomly.
Pair Corralation between Chengdu Kanghua and Linzhou Heavy
Assuming the 90 days trading horizon Chengdu Kanghua Biological is expected to under-perform the Linzhou Heavy. In addition to that, Chengdu Kanghua is 1.03 times more volatile than Linzhou Heavy Machinery. It trades about -0.01 of its total potential returns per unit of risk. Linzhou Heavy Machinery is currently generating about 0.01 per unit of volatility. If you would invest 459.00 in Linzhou Heavy Machinery on September 4, 2024 and sell it today you would lose (7.00) from holding Linzhou Heavy Machinery or give up 1.53% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Chengdu Kanghua Biological vs. Linzhou Heavy Machinery
Performance |
| Timeline |
| Chengdu Kanghua Biol |
| Linzhou Heavy Machinery |
Chengdu Kanghua and Linzhou Heavy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chengdu Kanghua and Linzhou Heavy
The main advantage of trading using opposite Chengdu Kanghua and Linzhou Heavy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chengdu Kanghua position performs unexpectedly, Linzhou Heavy 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 Linzhou Heavy will offset losses from the drop in Linzhou Heavy'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 |
| Linzhou Heavy vs. Chengdu Kanghua Biological | Linzhou Heavy vs. Beijing Wantai Biological | Linzhou Heavy vs. Suzhou Novoprotein Scientific | Linzhou Heavy vs. Aluminum Corp of |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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