Correlation Between Hua Xia and Chongqing Changan
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By analyzing existing cross correlation between Hua Xia Bank and Chongqing Changan Automobile, you can compare the effects of market volatilities on Hua Xia 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 Hua Xia with a short position of Chongqing Changan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hua Xia and Chongqing Changan.
Diversification Opportunities for Hua Xia and Chongqing Changan
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Hua and Chongqing is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Hua Xia Bank and Chongqing Changan Automobile in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chongqing Changan and Hua Xia 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 Hua Xia Bank 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 Hua Xia i.e., Hua Xia and Chongqing Changan go up and down completely randomly.
Pair Corralation between Hua Xia and Chongqing Changan
Assuming the 90 days trading horizon Hua Xia Bank is expected to generate 0.49 times more return on investment than Chongqing Changan. However, Hua Xia Bank is 2.04 times less risky than Chongqing Changan. It trades about 0.08 of its potential returns per unit of risk. Chongqing Changan Automobile is currently generating about 0.02 per unit of risk. If you would invest 489.00 in Hua Xia Bank on September 5, 2024 and sell it today you would earn a total of 277.00 from holding Hua Xia Bank or generate 56.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hua Xia Bank vs. Chongqing Changan Automobile
Performance |
| Timeline |
| Hua Xia Bank |
| Chongqing Changan |
Hua Xia and Chongqing Changan Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hua Xia and Chongqing Changan
The main advantage of trading using opposite Hua Xia and Chongqing Changan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hua Xia 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.| Hua Xia vs. Ningbo Fangzheng Automobile | Hua Xia vs. Sinocat Environmental Technology | Hua Xia vs. Jiangsu Xinri E Vehicle | Hua Xia vs. Sanbo Hospital Management |
| Chongqing Changan vs. Bloomage Biotechnology Corp | Chongqing Changan vs. Jiangsu Financial Leasing | Chongqing Changan vs. Hua Xia Bank | Chongqing Changan vs. Xiamen Bank 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 Transaction History module to view history of all your transactions and understand their impact on performance.
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