Correlation Between Wanhua Chemical and China Kings
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By analyzing existing cross correlation between Wanhua Chemical Group and China Kings Resources, you can compare the effects of market volatilities on Wanhua Chemical and China Kings 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 China Kings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wanhua Chemical and China Kings.
Diversification Opportunities for Wanhua Chemical and China Kings
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Wanhua and China is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Wanhua Chemical Group and China Kings Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Kings Resources 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 China Kings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Kings Resources has no effect on the direction of Wanhua Chemical i.e., Wanhua Chemical and China Kings go up and down completely randomly.
Pair Corralation between Wanhua Chemical and China Kings
Assuming the 90 days trading horizon Wanhua Chemical Group is expected to generate 0.56 times more return on investment than China Kings. However, Wanhua Chemical Group is 1.78 times less risky than China Kings. It trades about -0.08 of its potential returns per unit of risk. China Kings Resources is currently generating about -0.14 per unit of risk. If you would invest 7,651 in Wanhua Chemical Group on September 2, 2024 and sell it today you would lose (222.00) from holding Wanhua Chemical Group or give up 2.9% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Wanhua Chemical Group vs. China Kings Resources
Performance |
| Timeline |
| Wanhua Chemical Group |
| China Kings Resources |
Wanhua Chemical and China Kings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wanhua Chemical and China Kings
The main advantage of trading using opposite Wanhua Chemical and China Kings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wanhua Chemical position performs unexpectedly, China Kings 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 China Kings will offset losses from the drop in China Kings' long position.| Wanhua Chemical vs. Zijin Mining Group | Wanhua Chemical vs. Baoshan Iron Steel | Wanhua Chemical vs. Shandong Gold Mining | Wanhua Chemical vs. Rongsheng Petrochemical Co |
| China Kings vs. Zijin Mining Group | China Kings vs. Wanhua Chemical Group | China Kings vs. Baoshan Iron Steel | China Kings 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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