Correlation Between Wanhua Chemical and Cathay Biotech
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By analyzing existing cross correlation between Wanhua Chemical Group and Cathay Biotech, you can compare the effects of market volatilities on Wanhua Chemical and Cathay Biotech 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 Cathay Biotech. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wanhua Chemical and Cathay Biotech.
Diversification Opportunities for Wanhua Chemical and Cathay Biotech
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Wanhua and Cathay is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Wanhua Chemical Group and Cathay Biotech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cathay Biotech 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 Cathay Biotech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cathay Biotech has no effect on the direction of Wanhua Chemical i.e., Wanhua Chemical and Cathay Biotech go up and down completely randomly.
Pair Corralation between Wanhua Chemical and Cathay Biotech
Assuming the 90 days trading horizon Wanhua Chemical Group is expected to generate 0.66 times more return on investment than Cathay Biotech. However, Wanhua Chemical Group is 1.52 times less risky than Cathay Biotech. It trades about 0.01 of its potential returns per unit of risk. Cathay Biotech is currently generating about -0.01 per unit of risk. If you would invest 7,580 in Wanhua Chemical Group on September 14, 2024 and sell it today you would earn a total of 55.00 from holding Wanhua Chemical Group or generate 0.73% 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. Cathay Biotech
Performance |
| Timeline |
| Wanhua Chemical Group |
| Cathay Biotech |
Wanhua Chemical and Cathay Biotech Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wanhua Chemical and Cathay Biotech
The main advantage of trading using opposite Wanhua Chemical and Cathay Biotech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wanhua Chemical position performs unexpectedly, Cathay Biotech 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 Cathay Biotech will offset losses from the drop in Cathay Biotech's long position.| Wanhua Chemical vs. Jiangsu Yueda Investment | Wanhua Chemical vs. Jointo Energy Investment | Wanhua Chemical vs. Meinian Onehealth Healthcare | Wanhua Chemical vs. Yunnan Jianzhijia Health Chain |
| Cathay Biotech vs. Suofeiya Home Collection | Cathay Biotech vs. Meinian Onehealth Healthcare | Cathay Biotech vs. Dezhan HealthCare Co | Cathay Biotech vs. PKU HealthCare Corp |
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 Stocks Directory module to find actively traded stocks across global markets.
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