Correlation Between Chongqing Road and Metro Investment
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By analyzing existing cross correlation between Chongqing Road Bridge and Metro Investment Development, you can compare the effects of market volatilities on Chongqing Road and Metro Investment 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 Chongqing Road with a short position of Metro Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chongqing Road and Metro Investment.
Diversification Opportunities for Chongqing Road and Metro Investment
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Chongqing and Metro is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Chongqing Road Bridge and Metro Investment Development in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Metro Investment Dev and Chongqing Road 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 Chongqing Road Bridge are associated (or correlated) with Metro Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Metro Investment Dev has no effect on the direction of Chongqing Road i.e., Chongqing Road and Metro Investment go up and down completely randomly.
Pair Corralation between Chongqing Road and Metro Investment
Assuming the 90 days trading horizon Chongqing Road Bridge is expected to under-perform the Metro Investment. But the stock apears to be less risky and, when comparing its historical volatility, Chongqing Road Bridge is 1.48 times less risky than Metro Investment. The stock trades about -0.11 of its potential returns per unit of risk. The Metro Investment Development is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest 401.00 in Metro Investment Development on October 23, 2024 and sell it today you would lose (14.00) from holding Metro Investment Development or give up 3.49% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Chongqing Road Bridge vs. Metro Investment Development
Performance |
| Timeline |
| Chongqing Road Bridge |
| Metro Investment Dev |
Chongqing Road and Metro Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chongqing Road and Metro Investment
The main advantage of trading using opposite Chongqing Road and Metro Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chongqing Road position performs unexpectedly, Metro Investment 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 Metro Investment will offset losses from the drop in Metro Investment's long position.| Chongqing Road vs. Shengda Mining Co | Chongqing Road vs. Qingdao Hiron Commercial | Chongqing Road vs. Baoshan Iron Steel | Chongqing Road vs. Xinjiang Baodi Mining |
| Metro Investment vs. Eastern Air Logistics | Metro Investment vs. Great Sun Foods Co | Metro Investment vs. Jiahe Foods Industry | Metro Investment vs. Holitech Technology 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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