Correlation Between Chengdu Kanghua and Allied Machinery
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By analyzing existing cross correlation between Chengdu Kanghua Biological and Allied Machinery Co, you can compare the effects of market volatilities on Chengdu Kanghua and Allied Machinery 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 Allied Machinery. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chengdu Kanghua and Allied Machinery.
Diversification Opportunities for Chengdu Kanghua and Allied Machinery
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Chengdu and Allied is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Chengdu Kanghua Biological and Allied Machinery Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Allied 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 Allied Machinery. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Allied Machinery has no effect on the direction of Chengdu Kanghua i.e., Chengdu Kanghua and Allied Machinery go up and down completely randomly.
Pair Corralation between Chengdu Kanghua and Allied Machinery
Assuming the 90 days trading horizon Chengdu Kanghua Biological is expected to generate 1.17 times more return on investment than Allied Machinery. However, Chengdu Kanghua is 1.17 times more volatile than Allied Machinery Co. It trades about -0.01 of its potential returns per unit of risk. Allied Machinery Co is currently generating about -0.03 per unit of risk. If you would invest 8,408 in Chengdu Kanghua Biological on September 5, 2024 and sell it today you would lose (2,664) from holding Chengdu Kanghua Biological or give up 31.68% 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. Allied Machinery Co
Performance |
| Timeline |
| Chengdu Kanghua Biol |
| Allied Machinery |
Chengdu Kanghua and Allied Machinery Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chengdu Kanghua and Allied Machinery
The main advantage of trading using opposite Chengdu Kanghua and Allied Machinery positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chengdu Kanghua position performs unexpectedly, Allied Machinery 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 Allied Machinery will offset losses from the drop in Allied Machinery's long position.| Chengdu Kanghua vs. Yingde Greatchem Chemicals | Chengdu Kanghua vs. Guangdong Jingyi Metal | Chengdu Kanghua vs. Aluminum Corp of | Chengdu Kanghua vs. YLZ Information Tech |
| Allied Machinery vs. Chengdu Kanghua Biological | Allied Machinery vs. Beijing Wantai Biological | Allied Machinery vs. Suzhou Novoprotein Scientific | Allied Machinery 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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