Correlation Between Wanhua Chemical and Jiangxi Hengda
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By analyzing existing cross correlation between Wanhua Chemical Group and Jiangxi Hengda Hi Tech, you can compare the effects of market volatilities on Wanhua Chemical and Jiangxi Hengda 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 Jiangxi Hengda. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wanhua Chemical and Jiangxi Hengda.
Diversification Opportunities for Wanhua Chemical and Jiangxi Hengda
0.34 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Wanhua and Jiangxi is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Wanhua Chemical Group and Jiangxi Hengda Hi Tech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jiangxi Hengda Hi 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 Jiangxi Hengda. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jiangxi Hengda Hi has no effect on the direction of Wanhua Chemical i.e., Wanhua Chemical and Jiangxi Hengda go up and down completely randomly.
Pair Corralation between Wanhua Chemical and Jiangxi Hengda
Assuming the 90 days trading horizon Wanhua Chemical Group is expected to under-perform the Jiangxi Hengda. But the stock apears to be less risky and, when comparing its historical volatility, Wanhua Chemical Group is 1.95 times less risky than Jiangxi Hengda. The stock trades about -0.04 of its potential returns per unit of risk. The Jiangxi Hengda Hi Tech is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest 750.00 in Jiangxi Hengda Hi Tech on October 25, 2024 and sell it today you would lose (251.00) from holding Jiangxi Hengda Hi Tech or give up 33.47% 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. Jiangxi Hengda Hi Tech
Performance |
| Timeline |
| Wanhua Chemical Group |
| Jiangxi Hengda Hi |
Wanhua Chemical and Jiangxi Hengda Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wanhua Chemical and Jiangxi Hengda
The main advantage of trading using opposite Wanhua Chemical and Jiangxi Hengda positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wanhua Chemical position performs unexpectedly, Jiangxi Hengda 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 Jiangxi Hengda will offset losses from the drop in Jiangxi Hengda's long position.| Wanhua Chemical vs. GuoChuang Software Co | Wanhua Chemical vs. ZYF Lopsking Aluminum | Wanhua Chemical vs. Guangdong Jingyi Metal | Wanhua Chemical vs. Digiwin Software Co |
| Jiangxi Hengda vs. Ye Chiu Metal | Jiangxi Hengda vs. CITIC Metal Co | Jiangxi Hengda vs. Maccura Biotechnology Co | Jiangxi Hengda vs. Chongqing Shunbo Aluminum |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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