Correlation Between Wanhua Chemical and Guangdong Tianhe
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By analyzing existing cross correlation between Wanhua Chemical Group and Guangdong Tianhe Agricultural, you can compare the effects of market volatilities on Wanhua Chemical and Guangdong Tianhe 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 Guangdong Tianhe. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wanhua Chemical and Guangdong Tianhe.
Diversification Opportunities for Wanhua Chemical and Guangdong Tianhe
-0.27 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Wanhua and Guangdong is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Wanhua Chemical Group and Guangdong Tianhe Agricultural in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guangdong Tianhe Agr 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 Guangdong Tianhe. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guangdong Tianhe Agr has no effect on the direction of Wanhua Chemical i.e., Wanhua Chemical and Guangdong Tianhe go up and down completely randomly.
Pair Corralation between Wanhua Chemical and Guangdong Tianhe
Assuming the 90 days trading horizon Wanhua Chemical Group is expected to under-perform the Guangdong Tianhe. But the stock apears to be less risky and, when comparing its historical volatility, Wanhua Chemical Group is 1.56 times less risky than Guangdong Tianhe. The stock trades about -0.02 of its potential returns per unit of risk. The Guangdong Tianhe Agricultural is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest 723.00 in Guangdong Tianhe Agricultural on September 26, 2024 and sell it today you would lose (116.00) from holding Guangdong Tianhe Agricultural or give up 16.04% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Wanhua Chemical Group vs. Guangdong Tianhe Agricultural
Performance |
| Timeline |
| Wanhua Chemical Group |
| Guangdong Tianhe Agr |
Wanhua Chemical and Guangdong Tianhe Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wanhua Chemical and Guangdong Tianhe
The main advantage of trading using opposite Wanhua Chemical and Guangdong Tianhe positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wanhua Chemical position performs unexpectedly, Guangdong Tianhe 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 Guangdong Tianhe will offset losses from the drop in Guangdong Tianhe'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 |
| Guangdong Tianhe vs. Zijin Mining Group | Guangdong Tianhe vs. Wanhua Chemical Group | Guangdong Tianhe vs. Baoshan Iron Steel | Guangdong Tianhe vs. Shandong Gold Mining |
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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