Correlation Between Wuhan Yangtze and Guangdong Shenglu
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By analyzing existing cross correlation between Wuhan Yangtze Communication and Guangdong Shenglu Telecommunication, you can compare the effects of market volatilities on Wuhan Yangtze and Guangdong Shenglu 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 Guangdong Shenglu. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wuhan Yangtze and Guangdong Shenglu.
Diversification Opportunities for Wuhan Yangtze and Guangdong Shenglu
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Wuhan and Guangdong is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Wuhan Yangtze Communication and Guangdong Shenglu Telecommunic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guangdong Shenglu 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 Guangdong Shenglu. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guangdong Shenglu has no effect on the direction of Wuhan Yangtze i.e., Wuhan Yangtze and Guangdong Shenglu go up and down completely randomly.
Pair Corralation between Wuhan Yangtze and Guangdong Shenglu
Assuming the 90 days trading horizon Wuhan Yangtze Communication is expected to generate 1.99 times more return on investment than Guangdong Shenglu. However, Wuhan Yangtze is 1.99 times more volatile than Guangdong Shenglu Telecommunication. It trades about 0.23 of its potential returns per unit of risk. Guangdong Shenglu Telecommunication is currently generating about -0.01 per unit of risk. If you would invest 1,963 in Wuhan Yangtze Communication on August 29, 2024 and sell it today you would earn a total of 622.00 from holding Wuhan Yangtze Communication or generate 31.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Wuhan Yangtze Communication vs. Guangdong Shenglu Telecommunic
Performance |
| Timeline |
| Wuhan Yangtze Commun |
| Guangdong Shenglu |
Wuhan Yangtze and Guangdong Shenglu Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wuhan Yangtze and Guangdong Shenglu
The main advantage of trading using opposite Wuhan Yangtze and Guangdong Shenglu positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wuhan Yangtze position performs unexpectedly, Guangdong Shenglu 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 Guangdong Shenglu will offset losses from the drop in Guangdong Shenglu's long position.| Wuhan Yangtze vs. Yankershop Food Co | Wuhan Yangtze vs. Youyou Foods Co | Wuhan Yangtze vs. Great Sun Foods Co | Wuhan Yangtze vs. Harbin Air Conditioning |
| Guangdong Shenglu vs. Shenzhen MYS Environmental | Guangdong Shenglu vs. AVIC Fund Management | Guangdong Shenglu vs. Shenzhen Bingchuan Network | Guangdong Shenglu vs. Penghua Shenzhen Energy |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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