Correlation Between Wanhua Chemical and Hangzhou Gaoxin
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By analyzing existing cross correlation between Wanhua Chemical Group and Hangzhou Gaoxin Rubber, you can compare the effects of market volatilities on Wanhua Chemical and Hangzhou Gaoxin 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 Hangzhou Gaoxin. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wanhua Chemical and Hangzhou Gaoxin.
Diversification Opportunities for Wanhua Chemical and Hangzhou Gaoxin
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Wanhua and Hangzhou is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Wanhua Chemical Group and Hangzhou Gaoxin Rubber in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hangzhou Gaoxin Rubber 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 Hangzhou Gaoxin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hangzhou Gaoxin Rubber has no effect on the direction of Wanhua Chemical i.e., Wanhua Chemical and Hangzhou Gaoxin go up and down completely randomly.
Pair Corralation between Wanhua Chemical and Hangzhou Gaoxin
Assuming the 90 days trading horizon Wanhua Chemical Group is expected to under-perform the Hangzhou Gaoxin. But the stock apears to be less risky and, when comparing its historical volatility, Wanhua Chemical Group is 1.67 times less risky than Hangzhou Gaoxin. The stock trades about -0.03 of its potential returns per unit of risk. The Hangzhou Gaoxin Rubber is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 1,050 in Hangzhou Gaoxin Rubber on September 1, 2024 and sell it today you would earn a total of 32.00 from holding Hangzhou Gaoxin Rubber or generate 3.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Wanhua Chemical Group vs. Hangzhou Gaoxin Rubber
Performance |
| Timeline |
| Wanhua Chemical Group |
| Hangzhou Gaoxin Rubber |
Wanhua Chemical and Hangzhou Gaoxin Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wanhua Chemical and Hangzhou Gaoxin
The main advantage of trading using opposite Wanhua Chemical and Hangzhou Gaoxin positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wanhua Chemical position performs unexpectedly, Hangzhou Gaoxin 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 Hangzhou Gaoxin will offset losses from the drop in Hangzhou Gaoxin'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 |
| Hangzhou Gaoxin vs. Shanghai Yanpu Metal | Hangzhou Gaoxin vs. Ningxia Younglight Chemicals | Hangzhou Gaoxin vs. Dymatic Chemicals | Hangzhou Gaoxin vs. CITIC Metal 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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