Correlation Between Wuhan Yangtze and Danhua Chemical
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By analyzing existing cross correlation between Wuhan Yangtze Communication and Danhua Chemical Technology, you can compare the effects of market volatilities on Wuhan Yangtze and Danhua 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 Danhua Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wuhan Yangtze and Danhua Chemical.
Diversification Opportunities for Wuhan Yangtze and Danhua Chemical
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Wuhan and Danhua is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Wuhan Yangtze Communication and Danhua Chemical Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Danhua Chemical Tech 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 Danhua Chemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Danhua Chemical Tech has no effect on the direction of Wuhan Yangtze i.e., Wuhan Yangtze and Danhua Chemical go up and down completely randomly.
Pair Corralation between Wuhan Yangtze and Danhua Chemical
Assuming the 90 days trading horizon Wuhan Yangtze Communication is expected to generate 1.11 times more return on investment than Danhua Chemical. However, Wuhan Yangtze is 1.11 times more volatile than Danhua Chemical Technology. It trades about 0.05 of its potential returns per unit of risk. Danhua Chemical Technology is currently generating about 0.01 per unit of risk. If you would invest 1,675 in Wuhan Yangtze Communication on September 4, 2024 and sell it today you would earn a total of 1,187 from holding Wuhan Yangtze Communication or generate 70.87% 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. Danhua Chemical Technology
Performance |
| Timeline |
| Wuhan Yangtze Commun |
| Danhua Chemical Tech |
Wuhan Yangtze and Danhua Chemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wuhan Yangtze and Danhua Chemical
The main advantage of trading using opposite Wuhan Yangtze and Danhua Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wuhan Yangtze position performs unexpectedly, Danhua 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 Danhua Chemical will offset losses from the drop in Danhua 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 |
| Danhua Chemical vs. Sinomach General Machinery | Danhua Chemical vs. Shenzhen Zhongzhuang Construction | Danhua Chemical vs. Tengda Construction Group | Danhua Chemical vs. Anhui Huilong Agricultural |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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