Correlation Between Wanhua Chemical and Ye Chiu
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By analyzing existing cross correlation between Wanhua Chemical Group and Ye Chiu Metal, you can compare the effects of market volatilities on Wanhua Chemical and Ye Chiu 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 Ye Chiu. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wanhua Chemical and Ye Chiu.
Diversification Opportunities for Wanhua Chemical and Ye Chiu
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Wanhua and 601388 is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Wanhua Chemical Group and Ye Chiu Metal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ye Chiu Metal 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 Ye Chiu. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ye Chiu Metal has no effect on the direction of Wanhua Chemical i.e., Wanhua Chemical and Ye Chiu go up and down completely randomly.
Pair Corralation between Wanhua Chemical and Ye Chiu
Assuming the 90 days trading horizon Wanhua Chemical Group is expected to under-perform the Ye Chiu. But the stock apears to be less risky and, when comparing its historical volatility, Wanhua Chemical Group is 1.26 times less risky than Ye Chiu. The stock trades about -0.06 of its potential returns per unit of risk. The Ye Chiu Metal is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 266.00 in Ye Chiu Metal on August 29, 2024 and sell it today you would lose (5.00) from holding Ye Chiu Metal or give up 1.88% 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. Ye Chiu Metal
Performance |
| Timeline |
| Wanhua Chemical Group |
| Ye Chiu Metal |
Wanhua Chemical and Ye Chiu Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wanhua Chemical and Ye Chiu
The main advantage of trading using opposite Wanhua Chemical and Ye Chiu positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wanhua Chemical position performs unexpectedly, Ye Chiu 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 Ye Chiu will offset losses from the drop in Ye Chiu'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 |
| Ye Chiu vs. Wanhua Chemical Group | Ye Chiu vs. Shandong Gold Mining | Ye Chiu vs. Rongsheng Petrochemical Co | Ye Chiu vs. Inner Mongolia BaoTou |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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