Correlation Between Wanhua Chemical and Shandong Hongchuang
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By analyzing existing cross correlation between Wanhua Chemical Group and Shandong Hongchuang Aluminum, you can compare the effects of market volatilities on Wanhua Chemical and Shandong Hongchuang 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 Shandong Hongchuang. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wanhua Chemical and Shandong Hongchuang.
Diversification Opportunities for Wanhua Chemical and Shandong Hongchuang
0.21 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Wanhua and Shandong is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Wanhua Chemical Group and Shandong Hongchuang Aluminum in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shandong Hongchuang 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 Shandong Hongchuang. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shandong Hongchuang has no effect on the direction of Wanhua Chemical i.e., Wanhua Chemical and Shandong Hongchuang go up and down completely randomly.
Pair Corralation between Wanhua Chemical and Shandong Hongchuang
Assuming the 90 days trading horizon Wanhua Chemical Group is expected to under-perform the Shandong Hongchuang. But the stock apears to be less risky and, when comparing its historical volatility, Wanhua Chemical Group is 2.09 times less risky than Shandong Hongchuang. The stock trades about -0.27 of its potential returns per unit of risk. The Shandong Hongchuang Aluminum is currently generating about -0.08 of returns per unit of risk over similar time horizon. If you would invest 804.00 in Shandong Hongchuang Aluminum on September 12, 2024 and sell it today you would lose (49.00) from holding Shandong Hongchuang Aluminum or give up 6.09% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Wanhua Chemical Group vs. Shandong Hongchuang Aluminum
Performance |
| Timeline |
| Wanhua Chemical Group |
| Shandong Hongchuang |
Wanhua Chemical and Shandong Hongchuang Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wanhua Chemical and Shandong Hongchuang
The main advantage of trading using opposite Wanhua Chemical and Shandong Hongchuang positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wanhua Chemical position performs unexpectedly, Shandong Hongchuang 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 Shandong Hongchuang will offset losses from the drop in Shandong Hongchuang's long position.| Wanhua Chemical vs. Zijin Mining Group | Wanhua Chemical vs. Baoshan Iron Steel | Wanhua Chemical vs. Rongsheng Petrochemical Co | Wanhua Chemical vs. Hoshine Silicon Ind |
| Shandong Hongchuang vs. Zijin Mining Group | Shandong Hongchuang vs. Wanhua Chemical Group | Shandong Hongchuang vs. Baoshan Iron Steel | Shandong Hongchuang vs. Rongsheng Petrochemical 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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