Correlation Between Hubei Xingfa and Changchun
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By analyzing existing cross correlation between Hubei Xingfa Chemicals and Changchun UP Optotech, you can compare the effects of market volatilities on Hubei Xingfa and Changchun 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 Hubei Xingfa with a short position of Changchun. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hubei Xingfa and Changchun.
Diversification Opportunities for Hubei Xingfa and Changchun
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Hubei and Changchun is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Hubei Xingfa Chemicals and Changchun UP Optotech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Changchun UP Optotech and Hubei Xingfa 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 Hubei Xingfa Chemicals are associated (or correlated) with Changchun. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Changchun UP Optotech has no effect on the direction of Hubei Xingfa i.e., Hubei Xingfa and Changchun go up and down completely randomly.
Pair Corralation between Hubei Xingfa and Changchun
Assuming the 90 days trading horizon Hubei Xingfa Chemicals is expected to generate 0.74 times more return on investment than Changchun. However, Hubei Xingfa Chemicals is 1.36 times less risky than Changchun. It trades about 0.09 of its potential returns per unit of risk. Changchun UP Optotech is currently generating about 0.06 per unit of risk. If you would invest 2,131 in Hubei Xingfa Chemicals on November 3, 2024 and sell it today you would earn a total of 56.00 from holding Hubei Xingfa Chemicals or generate 2.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hubei Xingfa Chemicals vs. Changchun UP Optotech
Performance |
| Timeline |
| Hubei Xingfa Chemicals |
| Changchun UP Optotech |
Hubei Xingfa and Changchun Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hubei Xingfa and Changchun
The main advantage of trading using opposite Hubei Xingfa and Changchun positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hubei Xingfa position performs unexpectedly, Changchun 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 Changchun will offset losses from the drop in Changchun's long position.| Hubei Xingfa vs. Zhangjiagang Freetrade Science | Hubei Xingfa vs. Caihong Display Devices | Hubei Xingfa vs. Shenzhen Noposion Agrochemicals | Hubei Xingfa vs. Ningbo Bohui Chemical |
| Changchun vs. SSAW Hotels Resorts | Changchun vs. China Eastern Airlines | Changchun vs. Hefei Metalforming Mach | Changchun vs. Spring Airlines 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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