Correlation Between Weihai Honglin and Chongqing Changan
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By analyzing existing cross correlation between Weihai Honglin Electronic and Chongqing Changan Automobile, you can compare the effects of market volatilities on Weihai Honglin and Chongqing Changan 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 Weihai Honglin with a short position of Chongqing Changan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Weihai Honglin and Chongqing Changan.
Diversification Opportunities for Weihai Honglin and Chongqing Changan
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Weihai and Chongqing is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Weihai Honglin Electronic and Chongqing Changan Automobile in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chongqing Changan and Weihai Honglin 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 Weihai Honglin Electronic are associated (or correlated) with Chongqing Changan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chongqing Changan has no effect on the direction of Weihai Honglin i.e., Weihai Honglin and Chongqing Changan go up and down completely randomly.
Pair Corralation between Weihai Honglin and Chongqing Changan
Assuming the 90 days trading horizon Weihai Honglin Electronic is expected to under-perform the Chongqing Changan. In addition to that, Weihai Honglin is 1.04 times more volatile than Chongqing Changan Automobile. It trades about -0.03 of its total potential returns per unit of risk. Chongqing Changan Automobile is currently generating about 0.02 per unit of volatility. If you would invest 1,272 in Chongqing Changan Automobile on September 4, 2024 and sell it today you would earn a total of 131.00 from holding Chongqing Changan Automobile or generate 10.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 87.21% |
| Values | Daily Returns |
Weihai Honglin Electronic vs. Chongqing Changan Automobile
Performance |
| Timeline |
| Weihai Honglin Electronic |
| Chongqing Changan |
Weihai Honglin and Chongqing Changan Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Weihai Honglin and Chongqing Changan
The main advantage of trading using opposite Weihai Honglin and Chongqing Changan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Weihai Honglin position performs unexpectedly, Chongqing Changan 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 Chongqing Changan will offset losses from the drop in Chongqing Changan's long position.| Weihai Honglin vs. Tianjin Pengling Rubber | Weihai Honglin vs. Shanghai CEO Environmental | Weihai Honglin vs. China Railway Materials | Weihai Honglin vs. Innovative Medical Management |
| Chongqing Changan vs. Industrial and Commercial | Chongqing Changan vs. China Construction Bank | Chongqing Changan vs. Agricultural Bank of | Chongqing Changan vs. Bank of China |
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 Stocks Directory module to find actively traded stocks across global markets.
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