Correlation Between Weihai Honglin and China Eastern
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By analyzing existing cross correlation between Weihai Honglin Electronic and China Eastern Airlines, you can compare the effects of market volatilities on Weihai Honglin and China Eastern 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 China Eastern. Check out your portfolio center. Please also check ongoing floating volatility patterns of Weihai Honglin and China Eastern.
Diversification Opportunities for Weihai Honglin and China Eastern
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Weihai and China is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Weihai Honglin Electronic and China Eastern Airlines in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Eastern Airlines 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 China Eastern. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Eastern Airlines has no effect on the direction of Weihai Honglin i.e., Weihai Honglin and China Eastern go up and down completely randomly.
Pair Corralation between Weihai Honglin and China Eastern
Assuming the 90 days trading horizon Weihai Honglin Electronic is expected to generate 1.67 times more return on investment than China Eastern. However, Weihai Honglin is 1.67 times more volatile than China Eastern Airlines. It trades about 0.04 of its potential returns per unit of risk. China Eastern Airlines is currently generating about 0.02 per unit of risk. If you would invest 1,258 in Weihai Honglin Electronic on September 3, 2024 and sell it today you would earn a total of 129.00 from holding Weihai Honglin Electronic or generate 10.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Weihai Honglin Electronic vs. China Eastern Airlines
Performance |
| Timeline |
| Weihai Honglin Electronic |
| China Eastern Airlines |
Weihai Honglin and China Eastern Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Weihai Honglin and China Eastern
The main advantage of trading using opposite Weihai Honglin and China Eastern positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Weihai Honglin position performs unexpectedly, China Eastern 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 China Eastern will offset losses from the drop in China Eastern's long position.| Weihai Honglin vs. Cultural Investment Holdings | Weihai Honglin vs. Gome Telecom Equipment | Weihai Honglin vs. Bus Online Co | Weihai Honglin vs. Holitech Technology Co |
| China Eastern vs. Hefei Metalforming Mach | China Eastern vs. Inspur Software Co | China Eastern vs. Sino Platinum Metals Co | China Eastern vs. Dhc Software Co |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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