Correlation Between Wanhua Chemical and Zhejiang Zhengguang
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By analyzing existing cross correlation between Wanhua Chemical Group and Zhejiang Zhengguang Industrial, you can compare the effects of market volatilities on Wanhua Chemical and Zhejiang Zhengguang 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 Zhejiang Zhengguang. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wanhua Chemical and Zhejiang Zhengguang.
Diversification Opportunities for Wanhua Chemical and Zhejiang Zhengguang
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Wanhua and Zhejiang is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Wanhua Chemical Group and Zhejiang Zhengguang Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zhejiang Zhengguang 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 Zhejiang Zhengguang. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zhejiang Zhengguang has no effect on the direction of Wanhua Chemical i.e., Wanhua Chemical and Zhejiang Zhengguang go up and down completely randomly.
Pair Corralation between Wanhua Chemical and Zhejiang Zhengguang
Assuming the 90 days trading horizon Wanhua Chemical Group is expected to under-perform the Zhejiang Zhengguang. But the stock apears to be less risky and, when comparing its historical volatility, Wanhua Chemical Group is 1.52 times less risky than Zhejiang Zhengguang. The stock trades about -0.06 of its potential returns per unit of risk. The Zhejiang Zhengguang Industrial is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest 2,737 in Zhejiang Zhengguang Industrial on September 3, 2024 and sell it today you would lose (241.00) from holding Zhejiang Zhengguang Industrial or give up 8.81% 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. Zhejiang Zhengguang Industrial
Performance |
| Timeline |
| Wanhua Chemical Group |
| Zhejiang Zhengguang |
Wanhua Chemical and Zhejiang Zhengguang Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wanhua Chemical and Zhejiang Zhengguang
The main advantage of trading using opposite Wanhua Chemical and Zhejiang Zhengguang positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wanhua Chemical position performs unexpectedly, Zhejiang Zhengguang 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 Zhejiang Zhengguang will offset losses from the drop in Zhejiang Zhengguang's long position.| Wanhua Chemical vs. Zijin Mining Group | Wanhua Chemical vs. Baoshan Iron Steel | Wanhua Chemical vs. Rongsheng Petrochemical Co | Wanhua Chemical vs. Hoshine Silicon Ind |
| Zhejiang Zhengguang vs. Zijin Mining Group | Zhejiang Zhengguang vs. Baoshan Iron Steel | Zhejiang Zhengguang vs. Rongsheng Petrochemical Co | Zhejiang Zhengguang vs. Hoshine Silicon Ind |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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