Correlation Between Wuhan Yangtze and Huadong Medicine
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By analyzing existing cross correlation between Wuhan Yangtze Communication and Huadong Medicine Co, you can compare the effects of market volatilities on Wuhan Yangtze and Huadong Medicine 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 Wuhan Yangtze with a short position of Huadong Medicine. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wuhan Yangtze and Huadong Medicine.
Diversification Opportunities for Wuhan Yangtze and Huadong Medicine
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Wuhan and Huadong is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Wuhan Yangtze Communication and Huadong Medicine Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Huadong Medicine and Wuhan Yangtze 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 Wuhan Yangtze Communication are associated (or correlated) with Huadong Medicine. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Huadong Medicine has no effect on the direction of Wuhan Yangtze i.e., Wuhan Yangtze and Huadong Medicine go up and down completely randomly.
Pair Corralation between Wuhan Yangtze and Huadong Medicine
Assuming the 90 days trading horizon Wuhan Yangtze Communication is expected to under-perform the Huadong Medicine. In addition to that, Wuhan Yangtze is 1.89 times more volatile than Huadong Medicine Co. It trades about -0.51 of its total potential returns per unit of risk. Huadong Medicine Co is currently generating about -0.33 per unit of volatility. If you would invest 3,676 in Huadong Medicine Co on October 14, 2024 and sell it today you would lose (413.00) from holding Huadong Medicine Co or give up 11.24% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Wuhan Yangtze Communication vs. Huadong Medicine Co
Performance |
| Timeline |
| Wuhan Yangtze Commun |
| Huadong Medicine |
Wuhan Yangtze and Huadong Medicine Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wuhan Yangtze and Huadong Medicine
The main advantage of trading using opposite Wuhan Yangtze and Huadong Medicine positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wuhan Yangtze position performs unexpectedly, Huadong Medicine 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 Huadong Medicine will offset losses from the drop in Huadong Medicine's long position.| Wuhan Yangtze vs. Chengdu Spaceon Electronics | Wuhan Yangtze vs. China Asset Management | Wuhan Yangtze vs. Ye Chiu Metal | Wuhan Yangtze vs. Huaxia Fund Management |
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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