Correlation Between Wintao Communications and New China
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By analyzing existing cross correlation between Wintao Communications Co and New China Life, you can compare the effects of market volatilities on Wintao Communications and New China 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 Wintao Communications with a short position of New China. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wintao Communications and New China.
Diversification Opportunities for Wintao Communications and New China
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Wintao and New is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Wintao Communications Co and New China Life in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on New China Life and Wintao Communications 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 Wintao Communications Co are associated (or correlated) with New China. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of New China Life has no effect on the direction of Wintao Communications i.e., Wintao Communications and New China go up and down completely randomly.
Pair Corralation between Wintao Communications and New China
Assuming the 90 days trading horizon Wintao Communications is expected to generate 2.18 times less return on investment than New China. In addition to that, Wintao Communications is 1.59 times more volatile than New China Life. It trades about 0.02 of its total potential returns per unit of risk. New China Life is currently generating about 0.07 per unit of volatility. If you would invest 2,797 in New China Life on September 12, 2024 and sell it today you would earn a total of 2,525 from holding New China Life or generate 90.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Wintao Communications Co vs. New China Life
Performance |
| Timeline |
| Wintao Communications |
| New China Life |
Wintao Communications and New China Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wintao Communications and New China
The main advantage of trading using opposite Wintao Communications and New China positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wintao Communications position performs unexpectedly, New China 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 New China will offset losses from the drop in New China's long position.The idea behind Wintao Communications Co and New China Life pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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