Correlation Between Chengdu Kanghua and Long Yuan
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By analyzing existing cross correlation between Chengdu Kanghua Biological and Long Yuan Construction, you can compare the effects of market volatilities on Chengdu Kanghua and Long Yuan 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 Long Yuan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chengdu Kanghua and Long Yuan.
Diversification Opportunities for Chengdu Kanghua and Long Yuan
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Chengdu and Long is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Chengdu Kanghua Biological and Long Yuan Construction in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Long Yuan Construction 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 Long Yuan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Long Yuan Construction has no effect on the direction of Chengdu Kanghua i.e., Chengdu Kanghua and Long Yuan go up and down completely randomly.
Pair Corralation between Chengdu Kanghua and Long Yuan
Assuming the 90 days trading horizon Chengdu Kanghua Biological is expected to under-perform the Long Yuan. But the stock apears to be less risky and, when comparing its historical volatility, Chengdu Kanghua Biological is 1.24 times less risky than Long Yuan. The stock trades about -0.22 of its potential returns per unit of risk. The Long Yuan Construction is currently generating about -0.15 of returns per unit of risk over similar time horizon. If you would invest 385.00 in Long Yuan Construction on October 24, 2024 and sell it today you would lose (32.00) from holding Long Yuan Construction or give up 8.31% 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. Long Yuan Construction
Performance |
| Timeline |
| Chengdu Kanghua Biol |
| Long Yuan Construction |
Chengdu Kanghua and Long Yuan Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chengdu Kanghua and Long Yuan
The main advantage of trading using opposite Chengdu Kanghua and Long Yuan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chengdu Kanghua position performs unexpectedly, Long Yuan 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 Long Yuan will offset losses from the drop in Long Yuan's long position.| Chengdu Kanghua vs. Guangzhou Automobile Group | Chengdu Kanghua vs. Tongyu Communication | Chengdu Kanghua vs. Zhejiang JIULI Hi tech | Chengdu Kanghua vs. Changchun Engley Automobile |
| Long Yuan vs. Eastern Air Logistics | Long Yuan vs. Highbroad Advanced Material | Long Yuan vs. Hubeiyichang Transportation Group | Long Yuan vs. Harbin Air Conditioning |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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