Correlation Between Wanhua Chemical and ADAMA
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By analyzing existing cross correlation between Wanhua Chemical Group and ADAMA, you can compare the effects of market volatilities on Wanhua Chemical and ADAMA 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 Wanhua Chemical with a short position of ADAMA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wanhua Chemical and ADAMA.
Diversification Opportunities for Wanhua Chemical and ADAMA
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Wanhua and ADAMA is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Wanhua Chemical Group and ADAMA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ADAMA and Wanhua Chemical 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 Wanhua Chemical Group are associated (or correlated) with ADAMA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ADAMA has no effect on the direction of Wanhua Chemical i.e., Wanhua Chemical and ADAMA go up and down completely randomly.
Pair Corralation between Wanhua Chemical and ADAMA
Assuming the 90 days trading horizon Wanhua Chemical Group is expected to under-perform the ADAMA. In addition to that, Wanhua Chemical is 1.05 times more volatile than ADAMA. It trades about -0.07 of its total potential returns per unit of risk. ADAMA is currently generating about 0.25 per unit of volatility. If you would invest 565.00 in ADAMA on November 28, 2024 and sell it today you would earn a total of 38.00 from holding ADAMA or generate 6.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Wanhua Chemical Group vs. ADAMA
Performance |
| Timeline |
| Wanhua Chemical Group |
| ADAMA |
Wanhua Chemical and ADAMA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wanhua Chemical and ADAMA
The main advantage of trading using opposite Wanhua Chemical and ADAMA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wanhua Chemical position performs unexpectedly, ADAMA 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 ADAMA will offset losses from the drop in ADAMA's long position.| Wanhua Chemical vs. Jinsanjiang Silicon Material | Wanhua Chemical vs. JCHX Mining Management | Wanhua Chemical vs. Liaoning Dingjide Petrochemical | Wanhua Chemical vs. North Copper Shanxi |
| ADAMA vs. Bangyan Technology Co | ADAMA vs. iSoftStone Information Technology | ADAMA vs. Soyea Technology Co | ADAMA vs. Shanghai CEO Environmental |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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