Correlation Between Wanhua Chemical and Xian Sunresin
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By analyzing existing cross correlation between Wanhua Chemical Group and Xian Sunresin New, you can compare the effects of market volatilities on Wanhua Chemical and Xian Sunresin 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 Xian Sunresin. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wanhua Chemical and Xian Sunresin.
Diversification Opportunities for Wanhua Chemical and Xian Sunresin
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Wanhua and Xian is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Wanhua Chemical Group and Xian Sunresin New in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xian Sunresin New 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 Xian Sunresin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xian Sunresin New has no effect on the direction of Wanhua Chemical i.e., Wanhua Chemical and Xian Sunresin go up and down completely randomly.
Pair Corralation between Wanhua Chemical and Xian Sunresin
Assuming the 90 days trading horizon Wanhua Chemical Group is expected to under-perform the Xian Sunresin. But the stock apears to be less risky and, when comparing its historical volatility, Wanhua Chemical Group is 1.71 times less risky than Xian Sunresin. The stock trades about -0.03 of its potential returns per unit of risk. The Xian Sunresin New is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest 4,890 in Xian Sunresin New on September 1, 2024 and sell it today you would earn a total of 637.00 from holding Xian Sunresin New or generate 13.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Wanhua Chemical Group vs. Xian Sunresin New
Performance |
| Timeline |
| Wanhua Chemical Group |
| Xian Sunresin New |
Wanhua Chemical and Xian Sunresin Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wanhua Chemical and Xian Sunresin
The main advantage of trading using opposite Wanhua Chemical and Xian Sunresin positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wanhua Chemical position performs unexpectedly, Xian Sunresin 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 Xian Sunresin will offset losses from the drop in Xian Sunresin'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 |
| Xian Sunresin vs. Heilongjiang Transport Development | Xian Sunresin vs. China Aluminum International | Xian Sunresin vs. Tianshan Aluminum Group | Xian Sunresin vs. Aluminum Corp of |
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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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