Correlation Between Chongqing Road and Wuhan Xianglong
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By analyzing existing cross correlation between Chongqing Road Bridge and Wuhan Xianglong Power, you can compare the effects of market volatilities on Chongqing Road and Wuhan Xianglong 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 Wuhan Xianglong. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chongqing Road and Wuhan Xianglong.
Diversification Opportunities for Chongqing Road and Wuhan Xianglong
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Chongqing and Wuhan is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Chongqing Road Bridge and Wuhan Xianglong Power in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wuhan Xianglong Power 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 Wuhan Xianglong. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wuhan Xianglong Power has no effect on the direction of Chongqing Road i.e., Chongqing Road and Wuhan Xianglong go up and down completely randomly.
Pair Corralation between Chongqing Road and Wuhan Xianglong
Assuming the 90 days trading horizon Chongqing Road is expected to generate 1.17 times less return on investment than Wuhan Xianglong. But when comparing it to its historical volatility, Chongqing Road Bridge is 1.06 times less risky than Wuhan Xianglong. It trades about 0.04 of its potential returns per unit of risk. Wuhan Xianglong Power is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 955.00 in Wuhan Xianglong Power on August 25, 2024 and sell it today you would earn a total of 320.00 from holding Wuhan Xianglong Power or generate 33.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 99.62% |
| Values | Daily Returns |
Chongqing Road Bridge vs. Wuhan Xianglong Power
Performance |
| Timeline |
| Chongqing Road Bridge |
| Wuhan Xianglong Power |
Chongqing Road and Wuhan Xianglong Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chongqing Road and Wuhan Xianglong
The main advantage of trading using opposite Chongqing Road and Wuhan Xianglong positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chongqing Road position performs unexpectedly, Wuhan Xianglong 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 Wuhan Xianglong will offset losses from the drop in Wuhan Xianglong's long position.| Chongqing Road vs. Guangdong Brandmax Marketing | Chongqing Road vs. GRINM Semiconductor Materials | Chongqing Road vs. Shandong Ruifeng Chemical | Chongqing Road vs. StarPower Semiconductor |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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