Correlation Between Wanhua Chemical and Hubei Xingfa
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By analyzing existing cross correlation between Wanhua Chemical Group and Hubei Xingfa Chemicals, you can compare the effects of market volatilities on Wanhua Chemical and Hubei Xingfa 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 Hubei Xingfa. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wanhua Chemical and Hubei Xingfa.
Diversification Opportunities for Wanhua Chemical and Hubei Xingfa
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Wanhua and Hubei is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Wanhua Chemical Group and Hubei Xingfa Chemicals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hubei Xingfa Chemicals 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 Hubei Xingfa. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hubei Xingfa Chemicals has no effect on the direction of Wanhua Chemical i.e., Wanhua Chemical and Hubei Xingfa go up and down completely randomly.
Pair Corralation between Wanhua Chemical and Hubei Xingfa
Assuming the 90 days trading horizon Wanhua Chemical Group is expected to under-perform the Hubei Xingfa. But the stock apears to be less risky and, when comparing its historical volatility, Wanhua Chemical Group is 1.66 times less risky than Hubei Xingfa. The stock trades about -0.11 of its potential returns per unit of risk. The Hubei Xingfa Chemicals is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 2,263 in Hubei Xingfa Chemicals on August 25, 2024 and sell it today you would earn a total of 24.00 from holding Hubei Xingfa Chemicals or generate 1.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Wanhua Chemical Group vs. Hubei Xingfa Chemicals
Performance |
| Timeline |
| Wanhua Chemical Group |
| Hubei Xingfa Chemicals |
Wanhua Chemical and Hubei Xingfa Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wanhua Chemical and Hubei Xingfa
The main advantage of trading using opposite Wanhua Chemical and Hubei Xingfa positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wanhua Chemical position performs unexpectedly, Hubei Xingfa 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 Hubei Xingfa will offset losses from the drop in Hubei Xingfa's long position.| Wanhua Chemical vs. VeriSilicon Microelectronics Shanghai | Wanhua Chemical vs. Hoshine Silicon Ind | Wanhua Chemical vs. Shandong Ruifeng Chemical | Wanhua Chemical vs. Lianhe Chemical Technology |
| Hubei Xingfa vs. Guangzhou Ruoyuchen Information | Hubei Xingfa vs. Northking Information Technology | Hubei Xingfa vs. Tonghua Grape Wine | Hubei Xingfa vs. Xiamen Goldenhome 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 Global Correlations module to find global opportunities by holding instruments from different markets.
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