Correlation Between Wanhua Chemical and Chongqing Shunbo
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By analyzing existing cross correlation between Wanhua Chemical Group and Chongqing Shunbo Aluminum, you can compare the effects of market volatilities on Wanhua Chemical and Chongqing Shunbo 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 Chongqing Shunbo. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wanhua Chemical and Chongqing Shunbo.
Diversification Opportunities for Wanhua Chemical and Chongqing Shunbo
0.06 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Wanhua and Chongqing is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Wanhua Chemical Group and Chongqing Shunbo Aluminum in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chongqing Shunbo Aluminum 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 Chongqing Shunbo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chongqing Shunbo Aluminum has no effect on the direction of Wanhua Chemical i.e., Wanhua Chemical and Chongqing Shunbo go up and down completely randomly.
Pair Corralation between Wanhua Chemical and Chongqing Shunbo
Assuming the 90 days trading horizon Wanhua Chemical Group is expected to under-perform the Chongqing Shunbo. But the stock apears to be less risky and, when comparing its historical volatility, Wanhua Chemical Group is 1.52 times less risky than Chongqing Shunbo. The stock trades about -0.34 of its potential returns per unit of risk. The Chongqing Shunbo Aluminum is currently generating about -0.07 of returns per unit of risk over similar time horizon. If you would invest 686.00 in Chongqing Shunbo Aluminum on October 25, 2024 and sell it today you would lose (23.00) from holding Chongqing Shunbo Aluminum or give up 3.35% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Wanhua Chemical Group vs. Chongqing Shunbo Aluminum
Performance |
| Timeline |
| Wanhua Chemical Group |
| Chongqing Shunbo Aluminum |
Wanhua Chemical and Chongqing Shunbo Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wanhua Chemical and Chongqing Shunbo
The main advantage of trading using opposite Wanhua Chemical and Chongqing Shunbo positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wanhua Chemical position performs unexpectedly, Chongqing Shunbo 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 Chongqing Shunbo will offset losses from the drop in Chongqing Shunbo's long position.| Wanhua Chemical vs. Zijin Mining Group | Wanhua Chemical vs. Baoshan Iron Steel | Wanhua Chemical vs. Rongsheng Petrochemical Co | Wanhua Chemical vs. Inner Mongolia BaoTou |
| Chongqing Shunbo vs. Zijin Mining Group | Chongqing Shunbo vs. Wanhua Chemical Group | Chongqing Shunbo vs. Baoshan Iron Steel | Chongqing Shunbo 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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