Correlation Between Weihai Honglin and AVIC Heavy
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By analyzing existing cross correlation between Weihai Honglin Electronic and AVIC Heavy Machinery, you can compare the effects of market volatilities on Weihai Honglin and AVIC Heavy 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 AVIC Heavy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Weihai Honglin and AVIC Heavy.
Diversification Opportunities for Weihai Honglin and AVIC Heavy
-0.48 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Weihai and AVIC is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Weihai Honglin Electronic and AVIC Heavy Machinery in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AVIC Heavy Machinery 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 AVIC Heavy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AVIC Heavy Machinery has no effect on the direction of Weihai Honglin i.e., Weihai Honglin and AVIC Heavy go up and down completely randomly.
Pair Corralation between Weihai Honglin and AVIC Heavy
Assuming the 90 days trading horizon Weihai Honglin Electronic is expected to generate 2.63 times more return on investment than AVIC Heavy. However, Weihai Honglin is 2.63 times more volatile than AVIC Heavy Machinery. It trades about 0.12 of its potential returns per unit of risk. AVIC Heavy Machinery is currently generating about -0.06 per unit of risk. If you would invest 1,490 in Weihai Honglin Electronic on November 7, 2024 and sell it today you would earn a total of 117.00 from holding Weihai Honglin Electronic or generate 7.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Weihai Honglin Electronic vs. AVIC Heavy Machinery
Performance |
| Timeline |
| Weihai Honglin Electronic |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Modest
| AVIC Heavy Machinery |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Weihai Honglin and AVIC Heavy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Weihai Honglin and AVIC Heavy
The main advantage of trading using opposite Weihai Honglin and AVIC Heavy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Weihai Honglin position performs unexpectedly, AVIC Heavy 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 AVIC Heavy will offset losses from the drop in AVIC Heavy's long position.The idea behind Weihai Honglin Electronic and AVIC Heavy Machinery 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.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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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