Correlation Between Wuhan Yangtze and Longxing Chemical
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By analyzing existing cross correlation between Wuhan Yangtze Communication and Longxing Chemical Stock, you can compare the effects of market volatilities on Wuhan Yangtze and Longxing Chemical 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 Longxing Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wuhan Yangtze and Longxing Chemical.
Diversification Opportunities for Wuhan Yangtze and Longxing Chemical
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Wuhan and Longxing is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Wuhan Yangtze Communication and Longxing Chemical Stock in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Longxing Chemical Stock 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 Longxing Chemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Longxing Chemical Stock has no effect on the direction of Wuhan Yangtze i.e., Wuhan Yangtze and Longxing Chemical go up and down completely randomly.
Pair Corralation between Wuhan Yangtze and Longxing Chemical
Assuming the 90 days trading horizon Wuhan Yangtze Communication is expected to generate 2.69 times more return on investment than Longxing Chemical. However, Wuhan Yangtze is 2.69 times more volatile than Longxing Chemical Stock. It trades about 0.32 of its potential returns per unit of risk. Longxing Chemical Stock is currently generating about 0.25 per unit of risk. If you would invest 1,865 in Wuhan Yangtze Communication on September 5, 2024 and sell it today you would earn a total of 977.00 from holding Wuhan Yangtze Communication or generate 52.39% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Wuhan Yangtze Communication vs. Longxing Chemical Stock
Performance |
| Timeline |
| Wuhan Yangtze Commun |
| Longxing Chemical Stock |
Wuhan Yangtze and Longxing Chemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wuhan Yangtze and Longxing Chemical
The main advantage of trading using opposite Wuhan Yangtze and Longxing Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wuhan Yangtze position performs unexpectedly, Longxing Chemical 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 Longxing Chemical will offset losses from the drop in Longxing Chemical's long position.| Wuhan Yangtze vs. Industrial and Commercial | Wuhan Yangtze vs. China Construction Bank | Wuhan Yangtze vs. Bank of China | Wuhan Yangtze vs. Agricultural Bank of |
| Longxing Chemical vs. Wuhan Yangtze Communication | Longxing Chemical vs. Sinofibers Technology Co | Longxing Chemical vs. Soyea Technology Co | Longxing Chemical vs. Citic Guoan Wine |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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