Correlation Between Weihai Honglin and Road Environment
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By analyzing existing cross correlation between Weihai Honglin Electronic and Road Environment Technology, you can compare the effects of market volatilities on Weihai Honglin and Road Environment 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 Road Environment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Weihai Honglin and Road Environment.
Diversification Opportunities for Weihai Honglin and Road Environment
-0.28 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Weihai and Road is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Weihai Honglin Electronic and Road Environment Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Road Environment Tec 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 Road Environment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Road Environment Tec has no effect on the direction of Weihai Honglin i.e., Weihai Honglin and Road Environment go up and down completely randomly.
Pair Corralation between Weihai Honglin and Road Environment
Assuming the 90 days trading horizon Weihai Honglin Electronic is expected to generate 2.2 times more return on investment than Road Environment. However, Weihai Honglin is 2.2 times more volatile than Road Environment Technology. It trades about 0.08 of its potential returns per unit of risk. Road Environment Technology is currently generating about 0.03 per unit of risk. If you would invest 1,596 in Weihai Honglin Electronic on November 8, 2024 and sell it today you would earn a total of 69.00 from holding Weihai Honglin Electronic or generate 4.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Weihai Honglin Electronic vs. Road Environment Technology
Performance |
| Timeline |
| Weihai Honglin Electronic |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Modest
| Road Environment Tec |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Weihai Honglin and Road Environment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Weihai Honglin and Road Environment
The main advantage of trading using opposite Weihai Honglin and Road Environment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Weihai Honglin position performs unexpectedly, Road Environment 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 Road Environment will offset losses from the drop in Road Environment's long position.The idea behind Weihai Honglin Electronic and Road Environment Technology 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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