Correlation Between Qinghaihuading Industrial and Chengdu Kanghua
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By analyzing existing cross correlation between Qinghaihuading Industrial Co and Chengdu Kanghua Biological, you can compare the effects of market volatilities on Qinghaihuading Industrial 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 Qinghaihuading Industrial with a short position of Chengdu Kanghua. Check out your portfolio center. Please also check ongoing floating volatility patterns of Qinghaihuading Industrial and Chengdu Kanghua.
Diversification Opportunities for Qinghaihuading Industrial and Chengdu Kanghua
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Qinghaihuading and Chengdu is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Qinghaihuading Industrial Co 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 Qinghaihuading Industrial 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 Qinghaihuading Industrial Co 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 Qinghaihuading Industrial i.e., Qinghaihuading Industrial and Chengdu Kanghua go up and down completely randomly.
Pair Corralation between Qinghaihuading Industrial and Chengdu Kanghua
Assuming the 90 days trading horizon Qinghaihuading Industrial Co is expected to generate 0.93 times more return on investment than Chengdu Kanghua. However, Qinghaihuading Industrial Co is 1.07 times less risky than Chengdu Kanghua. It trades about 0.14 of its potential returns per unit of risk. Chengdu Kanghua Biological is currently generating about -0.07 per unit of risk. If you would invest 436.00 in Qinghaihuading Industrial Co on September 5, 2024 and sell it today you would earn a total of 29.00 from holding Qinghaihuading Industrial Co or generate 6.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Qinghaihuading Industrial Co vs. Chengdu Kanghua Biological
Performance |
| Timeline |
| Qinghaihuading Industrial |
| Chengdu Kanghua Biol |
Qinghaihuading Industrial and Chengdu Kanghua Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Qinghaihuading Industrial and Chengdu Kanghua
The main advantage of trading using opposite Qinghaihuading Industrial and Chengdu Kanghua positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Qinghaihuading Industrial 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 Qinghaihuading Industrial Co 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.
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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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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