Correlation Between Huafa Industrial and Chongqing Changan
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By analyzing existing cross correlation between Huafa Industrial Co and Chongqing Changan Automobile, you can compare the effects of market volatilities on Huafa Industrial and Chongqing Changan 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 Huafa Industrial with a short position of Chongqing Changan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Huafa Industrial and Chongqing Changan.
Diversification Opportunities for Huafa Industrial and Chongqing Changan
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Huafa and Chongqing is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Huafa Industrial Co and Chongqing Changan Automobile in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chongqing Changan and Huafa Industrial 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 Huafa Industrial Co are associated (or correlated) with Chongqing Changan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chongqing Changan has no effect on the direction of Huafa Industrial i.e., Huafa Industrial and Chongqing Changan go up and down completely randomly.
Pair Corralation between Huafa Industrial and Chongqing Changan
Assuming the 90 days trading horizon Huafa Industrial Co is expected to generate 0.78 times more return on investment than Chongqing Changan. However, Huafa Industrial Co is 1.28 times less risky than Chongqing Changan. It trades about 0.22 of its potential returns per unit of risk. Chongqing Changan Automobile is currently generating about 0.17 per unit of risk. If you would invest 534.00 in Huafa Industrial Co on November 29, 2024 and sell it today you would earn a total of 31.00 from holding Huafa Industrial Co or generate 5.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Huafa Industrial Co vs. Chongqing Changan Automobile
Performance |
| Timeline |
| Huafa Industrial |
| Chongqing Changan |
Huafa Industrial and Chongqing Changan Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Huafa Industrial and Chongqing Changan
The main advantage of trading using opposite Huafa Industrial and Chongqing Changan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Huafa Industrial position performs unexpectedly, Chongqing Changan 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 Chongqing Changan will offset losses from the drop in Chongqing Changan's long position.| Huafa Industrial vs. Sanbo Hospital Management | Huafa Industrial vs. Jilin Jlu Communication | Huafa Industrial vs. Guangxi Wuzhou Communications | Huafa Industrial vs. CICC Fund Management |
| Chongqing Changan vs. Hubei Geoway Investment | Chongqing Changan vs. Zoje Resources Investment | Chongqing Changan vs. SI TECH Information Technology | Chongqing Changan vs. Kunwu Jiuding Investment |
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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