Correlation Between Chongqing Brewery and New Hope
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By analyzing existing cross correlation between Chongqing Brewery Co and New Hope Dairy, you can compare the effects of market volatilities on Chongqing Brewery and New Hope 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 Brewery with a short position of New Hope. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chongqing Brewery and New Hope.
Diversification Opportunities for Chongqing Brewery and New Hope
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Chongqing and New is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Chongqing Brewery Co and New Hope Dairy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on New Hope Dairy and Chongqing Brewery 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 Brewery Co are associated (or correlated) with New Hope. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of New Hope Dairy has no effect on the direction of Chongqing Brewery i.e., Chongqing Brewery and New Hope go up and down completely randomly.
Pair Corralation between Chongqing Brewery and New Hope
Assuming the 90 days trading horizon Chongqing Brewery is expected to generate 2.57 times less return on investment than New Hope. But when comparing it to its historical volatility, Chongqing Brewery Co is 1.95 times less risky than New Hope. It trades about 0.14 of its potential returns per unit of risk. New Hope Dairy is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest 1,240 in New Hope Dairy on September 26, 2024 and sell it today you would earn a total of 188.00 from holding New Hope Dairy or generate 15.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Chongqing Brewery Co vs. New Hope Dairy
Performance |
| Timeline |
| Chongqing Brewery |
| New Hope Dairy |
Chongqing Brewery and New Hope Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chongqing Brewery and New Hope
The main advantage of trading using opposite Chongqing Brewery and New Hope positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chongqing Brewery position performs unexpectedly, New Hope 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 New Hope will offset losses from the drop in New Hope's long position.| Chongqing Brewery vs. BYD Co Ltd | Chongqing Brewery vs. China Mobile Limited | Chongqing Brewery vs. Agricultural Bank of | Chongqing Brewery vs. Industrial and Commercial |
| New Hope vs. Ming Yang Smart | New Hope vs. 159681 | New Hope vs. 159005 | New Hope vs. Loctek Ergonomic Technology |
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 Stocks Directory module to find actively traded stocks across global markets.
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