Correlation Between Wanhua Chemical and Hubei Dinglong
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By analyzing existing cross correlation between Wanhua Chemical Group and Hubei Dinglong Chemical, you can compare the effects of market volatilities on Wanhua Chemical and Hubei Dinglong 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 Hubei Dinglong. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wanhua Chemical and Hubei Dinglong.
Diversification Opportunities for Wanhua Chemical and Hubei Dinglong
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Wanhua and Hubei is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Wanhua Chemical Group and Hubei Dinglong Chemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hubei Dinglong Chemical 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 Hubei Dinglong. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hubei Dinglong Chemical has no effect on the direction of Wanhua Chemical i.e., Wanhua Chemical and Hubei Dinglong go up and down completely randomly.
Pair Corralation between Wanhua Chemical and Hubei Dinglong
Assuming the 90 days trading horizon Wanhua Chemical Group is expected to under-perform the Hubei Dinglong. But the stock apears to be less risky and, when comparing its historical volatility, Wanhua Chemical Group is 1.65 times less risky than Hubei Dinglong. The stock trades about -0.11 of its potential returns per unit of risk. The Hubei Dinglong Chemical is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest 2,759 in Hubei Dinglong Chemical on August 25, 2024 and sell it today you would lose (80.00) from holding Hubei Dinglong Chemical or give up 2.9% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Wanhua Chemical Group vs. Hubei Dinglong Chemical
Performance |
| Timeline |
| Wanhua Chemical Group |
| Hubei Dinglong Chemical |
Wanhua Chemical and Hubei Dinglong Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wanhua Chemical and Hubei Dinglong
The main advantage of trading using opposite Wanhua Chemical and Hubei Dinglong positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wanhua Chemical position performs unexpectedly, Hubei Dinglong 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 Hubei Dinglong will offset losses from the drop in Hubei Dinglong's long position.| Wanhua Chemical vs. VeriSilicon Microelectronics Shanghai | Wanhua Chemical vs. Hoshine Silicon Ind | Wanhua Chemical vs. Shandong Ruifeng Chemical | Wanhua Chemical vs. Lianhe Chemical Technology |
| Hubei Dinglong vs. Zijin Mining Group | Hubei Dinglong vs. Wanhua Chemical Group | Hubei Dinglong vs. Shandong Gold Mining | Hubei Dinglong vs. Inner Mongolia BaoTou |
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 Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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