Correlation Between Wuhan Yangtze and Railway Signal
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By analyzing existing cross correlation between Wuhan Yangtze Communication and Railway Signal Communication, you can compare the effects of market volatilities on Wuhan Yangtze and Railway Signal 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 Railway Signal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wuhan Yangtze and Railway Signal.
Diversification Opportunities for Wuhan Yangtze and Railway Signal
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Wuhan and Railway is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Wuhan Yangtze Communication and Railway Signal Communication in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Railway Signal Commu 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 Railway Signal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Railway Signal Commu has no effect on the direction of Wuhan Yangtze i.e., Wuhan Yangtze and Railway Signal go up and down completely randomly.
Pair Corralation between Wuhan Yangtze and Railway Signal
Assuming the 90 days trading horizon Wuhan Yangtze Communication is expected to generate 3.46 times more return on investment than Railway Signal. However, Wuhan Yangtze is 3.46 times more volatile than Railway Signal Communication. It trades about 0.33 of its potential returns per unit of risk. Railway Signal Communication is currently generating about 0.04 per unit of risk. If you would invest 1,941 in Wuhan Yangtze Communication on September 1, 2024 and sell it today you would earn a total of 1,028 from holding Wuhan Yangtze Communication or generate 52.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Wuhan Yangtze Communication vs. Railway Signal Communication
Performance |
| Timeline |
| Wuhan Yangtze Commun |
| Railway Signal Commu |
Wuhan Yangtze and Railway Signal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wuhan Yangtze and Railway Signal
The main advantage of trading using opposite Wuhan Yangtze and Railway Signal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wuhan Yangtze position performs unexpectedly, Railway Signal 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 Railway Signal will offset losses from the drop in Railway Signal's long position.| Wuhan Yangtze vs. Industrial and Commercial | Wuhan Yangtze vs. Kweichow Moutai Co | Wuhan Yangtze vs. Agricultural Bank of | Wuhan Yangtze vs. China Mobile Limited |
| Railway Signal vs. Nanjing Putian Telecommunications | Railway Signal vs. Shenzhen Hifuture Electric | Railway Signal vs. Tianjin Realty Development | Railway Signal vs. Shenyang Huitian Thermal |
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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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