Correlation Between Wanhua Chemical and Liaoning Dingjide
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By analyzing existing cross correlation between Wanhua Chemical Group and Liaoning Dingjide Petrochemical, you can compare the effects of market volatilities on Wanhua Chemical and Liaoning Dingjide 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 Liaoning Dingjide. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wanhua Chemical and Liaoning Dingjide.
Diversification Opportunities for Wanhua Chemical and Liaoning Dingjide
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Wanhua and Liaoning is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Wanhua Chemical Group and Liaoning Dingjide Petrochemica in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Liaoning Dingjide 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 Liaoning Dingjide. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Liaoning Dingjide has no effect on the direction of Wanhua Chemical i.e., Wanhua Chemical and Liaoning Dingjide go up and down completely randomly.
Pair Corralation between Wanhua Chemical and Liaoning Dingjide
Assuming the 90 days trading horizon Wanhua Chemical Group is expected to under-perform the Liaoning Dingjide. But the stock apears to be less risky and, when comparing its historical volatility, Wanhua Chemical Group is 2.05 times less risky than Liaoning Dingjide. The stock trades about -0.23 of its potential returns per unit of risk. The Liaoning Dingjide Petrochemical is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 2,908 in Liaoning Dingjide Petrochemical on August 29, 2024 and sell it today you would earn a total of 131.00 from holding Liaoning Dingjide Petrochemical or generate 4.5% 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. Liaoning Dingjide Petrochemica
Performance |
| Timeline |
| Wanhua Chemical Group |
| Liaoning Dingjide |
Wanhua Chemical and Liaoning Dingjide Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wanhua Chemical and Liaoning Dingjide
The main advantage of trading using opposite Wanhua Chemical and Liaoning Dingjide positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wanhua Chemical position performs unexpectedly, Liaoning Dingjide 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 Liaoning Dingjide will offset losses from the drop in Liaoning Dingjide's long position.| Wanhua Chemical vs. Baoshan Iron Steel | Wanhua Chemical vs. Shandong Gold Mining | Wanhua Chemical vs. Rongsheng Petrochemical Co | Wanhua Chemical vs. Inner Mongolia BaoTou |
| Liaoning Dingjide vs. Baoshan Iron Steel | Liaoning Dingjide vs. Shandong Gold Mining | Liaoning Dingjide vs. Rongsheng Petrochemical Co | Liaoning Dingjide 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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