Correlation Between Chongqing Road and Beijing YanDong
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By analyzing existing cross correlation between Chongqing Road Bridge and Beijing YanDong MicroElectronic, you can compare the effects of market volatilities on Chongqing Road and Beijing YanDong 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 Beijing YanDong. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chongqing Road and Beijing YanDong.
Diversification Opportunities for Chongqing Road and Beijing YanDong
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Chongqing and Beijing is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Chongqing Road Bridge and Beijing YanDong MicroElectroni in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Beijing YanDong Micr 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 Beijing YanDong. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Beijing YanDong Micr has no effect on the direction of Chongqing Road i.e., Chongqing Road and Beijing YanDong go up and down completely randomly.
Pair Corralation between Chongqing Road and Beijing YanDong
Assuming the 90 days trading horizon Chongqing Road Bridge is expected to under-perform the Beijing YanDong. But the stock apears to be less risky and, when comparing its historical volatility, Chongqing Road Bridge is 1.41 times less risky than Beijing YanDong. The stock trades about -0.11 of its potential returns per unit of risk. The Beijing YanDong MicroElectronic is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest 2,046 in Beijing YanDong MicroElectronic on November 7, 2024 and sell it today you would lose (143.00) from holding Beijing YanDong MicroElectronic or give up 6.99% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Chongqing Road Bridge vs. Beijing YanDong MicroElectroni
Performance |
| Timeline |
| Chongqing Road Bridge |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Beijing YanDong Micr |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Chongqing Road and Beijing YanDong Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chongqing Road and Beijing YanDong
The main advantage of trading using opposite Chongqing Road and Beijing YanDong positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chongqing Road position performs unexpectedly, Beijing YanDong 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 Beijing YanDong will offset losses from the drop in Beijing YanDong's long position.The idea behind Chongqing Road Bridge and Beijing YanDong MicroElectronic 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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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