Correlation Between Wanhua Chemical and Xinjiang Zhongtai
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By analyzing existing cross correlation between Wanhua Chemical Group and Xinjiang Zhongtai Chemical, you can compare the effects of market volatilities on Wanhua Chemical and Xinjiang Zhongtai 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 Xinjiang Zhongtai. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wanhua Chemical and Xinjiang Zhongtai.
Diversification Opportunities for Wanhua Chemical and Xinjiang Zhongtai
0.08 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Wanhua and Xinjiang is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Wanhua Chemical Group and Xinjiang Zhongtai Chemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xinjiang Zhongtai 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 Xinjiang Zhongtai. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xinjiang Zhongtai has no effect on the direction of Wanhua Chemical i.e., Wanhua Chemical and Xinjiang Zhongtai go up and down completely randomly.
Pair Corralation between Wanhua Chemical and Xinjiang Zhongtai
Assuming the 90 days trading horizon Wanhua Chemical Group is expected to generate 0.77 times more return on investment than Xinjiang Zhongtai. However, Wanhua Chemical Group is 1.29 times less risky than Xinjiang Zhongtai. It trades about -0.01 of its potential returns per unit of risk. Xinjiang Zhongtai Chemical is currently generating about -0.03 per unit of risk. If you would invest 8,717 in Wanhua Chemical Group on September 13, 2024 and sell it today you would lose (1,227) from holding Wanhua Chemical Group or give up 14.08% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.79% |
| Values | Daily Returns |
Wanhua Chemical Group vs. Xinjiang Zhongtai Chemical
Performance |
| Timeline |
| Wanhua Chemical Group |
| Xinjiang Zhongtai |
Wanhua Chemical and Xinjiang Zhongtai Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wanhua Chemical and Xinjiang Zhongtai
The main advantage of trading using opposite Wanhua Chemical and Xinjiang Zhongtai positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wanhua Chemical position performs unexpectedly, Xinjiang Zhongtai 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 Xinjiang Zhongtai will offset losses from the drop in Xinjiang Zhongtai's long position.| Wanhua Chemical vs. Zijin Mining Group | Wanhua Chemical vs. Baoshan Iron Steel | Wanhua Chemical vs. Shandong Gold Mining | Wanhua Chemical vs. Rongsheng Petrochemical Co |
| Xinjiang Zhongtai vs. Heilongjiang Transport Development | Xinjiang Zhongtai vs. Harbin Hatou Investment | Xinjiang Zhongtai vs. Kunwu Jiuding Investment | Xinjiang Zhongtai vs. Xinjiang Beixin RoadBridge |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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