Correlation Between Hengli Petrochemical and Caihong Display
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By analyzing existing cross correlation between Hengli Petrochemical Co and Caihong Display Devices, you can compare the effects of market volatilities on Hengli Petrochemical and Caihong Display 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 Hengli Petrochemical with a short position of Caihong Display. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hengli Petrochemical and Caihong Display.
Diversification Opportunities for Hengli Petrochemical and Caihong Display
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Hengli and Caihong is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Hengli Petrochemical Co and Caihong Display Devices in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Caihong Display Devices and Hengli Petrochemical 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 Hengli Petrochemical Co are associated (or correlated) with Caihong Display. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Caihong Display Devices has no effect on the direction of Hengli Petrochemical i.e., Hengli Petrochemical and Caihong Display go up and down completely randomly.
Pair Corralation between Hengli Petrochemical and Caihong Display
Assuming the 90 days trading horizon Hengli Petrochemical is expected to generate 1.68 times less return on investment than Caihong Display. But when comparing it to its historical volatility, Hengli Petrochemical Co is 1.34 times less risky than Caihong Display. It trades about 0.12 of its potential returns per unit of risk. Caihong Display Devices is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 600.00 in Caihong Display Devices on October 18, 2024 and sell it today you would earn a total of 225.00 from holding Caihong Display Devices or generate 37.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hengli Petrochemical Co vs. Caihong Display Devices
Performance |
| Timeline |
| Hengli Petrochemical |
| Caihong Display Devices |
Hengli Petrochemical and Caihong Display Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hengli Petrochemical and Caihong Display
The main advantage of trading using opposite Hengli Petrochemical and Caihong Display positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hengli Petrochemical position performs unexpectedly, Caihong Display 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 Caihong Display will offset losses from the drop in Caihong Display's long position.| Hengli Petrochemical vs. China Publishing Media | Hengli Petrochemical vs. Thinkingdom Media Group | Hengli Petrochemical vs. Time Publishing and | Hengli Petrochemical vs. Changjiang Publishing Media |
| Caihong Display vs. Kangping Technology Co | Caihong Display vs. Gansu Huangtai Wine marketing | Caihong Display vs. Xinxiang Chemical Fiber | Caihong Display vs. Hengli Petrochemical Co |
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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