Correlation Between Wanhua Chemical and Weihai Guangwei
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By analyzing existing cross correlation between Wanhua Chemical Group and Weihai Guangwei Composites, you can compare the effects of market volatilities on Wanhua Chemical and Weihai Guangwei 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 Weihai Guangwei. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wanhua Chemical and Weihai Guangwei.
Diversification Opportunities for Wanhua Chemical and Weihai Guangwei
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Wanhua and Weihai is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Wanhua Chemical Group and Weihai Guangwei Composites in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Weihai Guangwei Comp 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 Weihai Guangwei. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Weihai Guangwei Comp has no effect on the direction of Wanhua Chemical i.e., Wanhua Chemical and Weihai Guangwei go up and down completely randomly.
Pair Corralation between Wanhua Chemical and Weihai Guangwei
Assuming the 90 days trading horizon Wanhua Chemical Group is expected to generate 0.51 times more return on investment than Weihai Guangwei. However, Wanhua Chemical Group is 1.97 times less risky than Weihai Guangwei. It trades about -0.23 of its potential returns per unit of risk. Weihai Guangwei Composites is currently generating about -0.14 per unit of risk. If you would invest 7,960 in Wanhua Chemical Group on August 29, 2024 and sell it today you would lose (670.00) from holding Wanhua Chemical Group or give up 8.42% 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. Weihai Guangwei Composites
Performance |
| Timeline |
| Wanhua Chemical Group |
| Weihai Guangwei Comp |
Wanhua Chemical and Weihai Guangwei Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wanhua Chemical and Weihai Guangwei
The main advantage of trading using opposite Wanhua Chemical and Weihai Guangwei positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wanhua Chemical position performs unexpectedly, Weihai Guangwei 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 Weihai Guangwei will offset losses from the drop in Weihai Guangwei's long position.| Wanhua Chemical vs. Chongqing Changan Automobile | Wanhua Chemical vs. Guangdong Shenglu Telecommunication | Wanhua Chemical vs. Tongyu Communication | Wanhua Chemical vs. Sinomach Automobile Co |
| Weihai Guangwei vs. Der International Home | Weihai Guangwei vs. New Hope Dairy | Weihai Guangwei vs. Yankershop Food Co | Weihai Guangwei vs. Juewei Food 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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