Correlation Between Harbin Air and Chengdu Kanghua
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By analyzing existing cross correlation between Harbin Air Conditioning and Chengdu Kanghua Biological, you can compare the effects of market volatilities on Harbin Air and Chengdu Kanghua 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 Harbin Air with a short position of Chengdu Kanghua. Check out your portfolio center. Please also check ongoing floating volatility patterns of Harbin Air and Chengdu Kanghua.
Diversification Opportunities for Harbin Air and Chengdu Kanghua
0.25 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Harbin and Chengdu is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Harbin Air Conditioning and Chengdu Kanghua Biological in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chengdu Kanghua Biol and Harbin Air 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 Harbin Air Conditioning are associated (or correlated) with Chengdu Kanghua. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chengdu Kanghua Biol has no effect on the direction of Harbin Air i.e., Harbin Air and Chengdu Kanghua go up and down completely randomly.
Pair Corralation between Harbin Air and Chengdu Kanghua
Assuming the 90 days trading horizon Harbin Air Conditioning is expected to generate 4.29 times more return on investment than Chengdu Kanghua. However, Harbin Air is 4.29 times more volatile than Chengdu Kanghua Biological. It trades about 0.08 of its potential returns per unit of risk. Chengdu Kanghua Biological is currently generating about -0.12 per unit of risk. If you would invest 423.00 in Harbin Air Conditioning on November 7, 2024 and sell it today you would earn a total of 23.00 from holding Harbin Air Conditioning or generate 5.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Harbin Air Conditioning vs. Chengdu Kanghua Biological
Performance |
| Timeline |
| Harbin Air Conditioning |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Chengdu Kanghua Biol |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Harbin Air and Chengdu Kanghua Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Harbin Air and Chengdu Kanghua
The main advantage of trading using opposite Harbin Air and Chengdu Kanghua positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Harbin Air position performs unexpectedly, Chengdu Kanghua 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 Chengdu Kanghua will offset losses from the drop in Chengdu Kanghua's long position.The idea behind Harbin Air Conditioning and Chengdu Kanghua Biological 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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