Correlation Between Wanhua Chemical and Shandong Iron
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By analyzing existing cross correlation between Wanhua Chemical Group and Shandong Iron and, you can compare the effects of market volatilities on Wanhua Chemical and Shandong Iron 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 Shandong Iron. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wanhua Chemical and Shandong Iron.
Diversification Opportunities for Wanhua Chemical and Shandong Iron
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Wanhua and Shandong is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Wanhua Chemical Group and Shandong Iron and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shandong Iron 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 Shandong Iron. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shandong Iron has no effect on the direction of Wanhua Chemical i.e., Wanhua Chemical and Shandong Iron go up and down completely randomly.
Pair Corralation between Wanhua Chemical and Shandong Iron
Assuming the 90 days trading horizon Wanhua Chemical Group is expected to under-perform the Shandong Iron. But the stock apears to be less risky and, when comparing its historical volatility, Wanhua Chemical Group is 1.47 times less risky than Shandong Iron. The stock trades about -0.23 of its potential returns per unit of risk. The Shandong Iron and is currently generating about -0.14 of returns per unit of risk over similar time horizon. If you would invest 149.00 in Shandong Iron and on October 30, 2024 and sell it today you would lose (8.00) from holding Shandong Iron and or give up 5.37% 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. Shandong Iron and
Performance |
| Timeline |
| Wanhua Chemical Group |
| Shandong Iron |
Wanhua Chemical and Shandong Iron Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wanhua Chemical and Shandong Iron
The main advantage of trading using opposite Wanhua Chemical and Shandong Iron positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wanhua Chemical position performs unexpectedly, Shandong Iron 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 Shandong Iron will offset losses from the drop in Shandong Iron's long position.| Wanhua Chemical vs. Citic Guoan Wine | Wanhua Chemical vs. Chengtun Mining Group | Wanhua Chemical vs. Pengxin International Mining | Wanhua Chemical vs. Tianjin Silvery Dragon |
| Shandong Iron vs. Zijin Mining Group | Shandong Iron vs. Wanhua Chemical Group | Shandong Iron vs. Baoshan Iron Steel | Shandong Iron vs. Shandong Gold Mining |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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