Correlation Between Chongqing Road and Zhongtong Guomai
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By analyzing existing cross correlation between Chongqing Road Bridge and Zhongtong Guomai Communication, you can compare the effects of market volatilities on Chongqing Road and Zhongtong Guomai 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 Zhongtong Guomai. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chongqing Road and Zhongtong Guomai.
Diversification Opportunities for Chongqing Road and Zhongtong Guomai
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Chongqing and Zhongtong is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Chongqing Road Bridge and Zhongtong Guomai Communication in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zhongtong Guomai Com 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 Zhongtong Guomai. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zhongtong Guomai Com has no effect on the direction of Chongqing Road i.e., Chongqing Road and Zhongtong Guomai go up and down completely randomly.
Pair Corralation between Chongqing Road and Zhongtong Guomai
Assuming the 90 days trading horizon Chongqing Road Bridge is expected to generate 0.92 times more return on investment than Zhongtong Guomai. However, Chongqing Road Bridge is 1.09 times less risky than Zhongtong Guomai. It trades about 0.04 of its potential returns per unit of risk. Zhongtong Guomai Communication is currently generating about 0.02 per unit of risk. If you would invest 493.00 in Chongqing Road Bridge on September 12, 2024 and sell it today you would earn a total of 230.00 from holding Chongqing Road Bridge or generate 46.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Chongqing Road Bridge vs. Zhongtong Guomai Communication
Performance |
| Timeline |
| Chongqing Road Bridge |
| Zhongtong Guomai Com |
Chongqing Road and Zhongtong Guomai Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chongqing Road and Zhongtong Guomai
The main advantage of trading using opposite Chongqing Road and Zhongtong Guomai positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chongqing Road position performs unexpectedly, Zhongtong Guomai 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 Zhongtong Guomai will offset losses from the drop in Zhongtong Guomai's long position.The idea behind Chongqing Road Bridge and Zhongtong Guomai Communication 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.
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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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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