Correlation Between Wanhua Chemical and Aluminum Corp
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By analyzing existing cross correlation between Wanhua Chemical Group and Aluminum Corp of, you can compare the effects of market volatilities on Wanhua Chemical and Aluminum Corp 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 Aluminum Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wanhua Chemical and Aluminum Corp.
Diversification Opportunities for Wanhua Chemical and Aluminum Corp
0.43 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Wanhua and Aluminum is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Wanhua Chemical Group and Aluminum Corp of in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aluminum Corp 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 Aluminum Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aluminum Corp has no effect on the direction of Wanhua Chemical i.e., Wanhua Chemical and Aluminum Corp go up and down completely randomly.
Pair Corralation between Wanhua Chemical and Aluminum Corp
Assuming the 90 days trading horizon Wanhua Chemical Group is expected to under-perform the Aluminum Corp. But the stock apears to be less risky and, when comparing its historical volatility, Wanhua Chemical Group is 1.58 times less risky than Aluminum Corp. The stock trades about -0.1 of its potential returns per unit of risk. The Aluminum Corp of is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest 730.00 in Aluminum Corp of on November 4, 2024 and sell it today you would earn a total of 46.00 from holding Aluminum Corp of or generate 6.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Wanhua Chemical Group vs. Aluminum Corp of
Performance |
| Timeline |
| Wanhua Chemical Group |
| Aluminum Corp |
Wanhua Chemical and Aluminum Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wanhua Chemical and Aluminum Corp
The main advantage of trading using opposite Wanhua Chemical and Aluminum Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wanhua Chemical position performs unexpectedly, Aluminum Corp 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 Aluminum Corp will offset losses from the drop in Aluminum Corp's long position.| Wanhua Chemical vs. Jinhui Mining Co | Wanhua Chemical vs. Shenyang Chemical Industry | Wanhua Chemical vs. Hainan Mining Co | Wanhua Chemical vs. Dymatic Chemicals |
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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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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