Correlation Between Chengdu Kanghua and Longjian Road
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By analyzing existing cross correlation between Chengdu Kanghua Biological and Longjian Road Bridge, you can compare the effects of market volatilities on Chengdu Kanghua and Longjian Road 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 Longjian Road. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chengdu Kanghua and Longjian Road.
Diversification Opportunities for Chengdu Kanghua and Longjian Road
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Chengdu and Longjian is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Chengdu Kanghua Biological and Longjian Road Bridge in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Longjian Road Bridge 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 Longjian Road. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Longjian Road Bridge has no effect on the direction of Chengdu Kanghua i.e., Chengdu Kanghua and Longjian Road go up and down completely randomly.
Pair Corralation between Chengdu Kanghua and Longjian Road
Assuming the 90 days trading horizon Chengdu Kanghua Biological is expected to under-perform the Longjian Road. In addition to that, Chengdu Kanghua is 1.61 times more volatile than Longjian Road Bridge. It trades about -0.2 of its total potential returns per unit of risk. Longjian Road Bridge is currently generating about -0.03 per unit of volatility. If you would invest 381.00 in Longjian Road Bridge on August 28, 2024 and sell it today you would lose (6.00) from holding Longjian Road Bridge or give up 1.57% 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. Longjian Road Bridge
Performance |
| Timeline |
| Chengdu Kanghua Biol |
| Longjian Road Bridge |
Chengdu Kanghua and Longjian Road Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chengdu Kanghua and Longjian Road
The main advantage of trading using opposite Chengdu Kanghua and Longjian Road positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chengdu Kanghua position performs unexpectedly, Longjian Road 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 Longjian Road will offset losses from the drop in Longjian Road's long position.| Chengdu Kanghua vs. Henzhen Zhaowei Machinery | Chengdu Kanghua vs. Jiangsu Xinri E Vehicle | Chengdu Kanghua vs. Huasi Agricultural Development | Chengdu Kanghua vs. Hunan Tyen Machinery |
| Longjian Road vs. Dalian Zeus Entertainment | Longjian Road vs. Bengang Steel Plates | Longjian Road vs. Beijing SPC Environment | Longjian Road vs. Jiangxi JDL Environmental |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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