Correlation Between Lao Feng and Chongqing Changan
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By analyzing existing cross correlation between Lao Feng Xiang and Chongqing Changan Automobile, you can compare the effects of market volatilities on Lao Feng and Chongqing Changan 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 Lao Feng with a short position of Chongqing Changan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lao Feng and Chongqing Changan.
Diversification Opportunities for Lao Feng and Chongqing Changan
0.13 | Correlation Coefficient |
Average diversification
The 3 months correlation between Lao and Chongqing is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Lao Feng Xiang and Chongqing Changan Automobile in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chongqing Changan and Lao Feng 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 Lao Feng Xiang are associated (or correlated) with Chongqing Changan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chongqing Changan has no effect on the direction of Lao Feng i.e., Lao Feng and Chongqing Changan go up and down completely randomly.
Pair Corralation between Lao Feng and Chongqing Changan
Assuming the 90 days trading horizon Lao Feng Xiang is expected to generate 0.81 times more return on investment than Chongqing Changan. However, Lao Feng Xiang is 1.23 times less risky than Chongqing Changan. It trades about 0.04 of its potential returns per unit of risk. Chongqing Changan Automobile is currently generating about 0.02 per unit of risk. If you would invest 4,130 in Lao Feng Xiang on September 12, 2024 and sell it today you would earn a total of 1,305 from holding Lao Feng Xiang or generate 31.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lao Feng Xiang vs. Chongqing Changan Automobile
Performance |
| Timeline |
| Lao Feng Xiang |
| Chongqing Changan |
Lao Feng and Chongqing Changan Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lao Feng and Chongqing Changan
The main advantage of trading using opposite Lao Feng and Chongqing Changan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lao Feng position performs unexpectedly, Chongqing Changan 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 Chongqing Changan will offset losses from the drop in Chongqing Changan's long position.| Lao Feng vs. Sunwave Communications Co | Lao Feng vs. Dr Peng Telecom | Lao Feng vs. Tongyu Communication | Lao Feng vs. Guangdong Shenglu Telecommunication |
| Chongqing Changan vs. Lutian Machinery Co | Chongqing Changan vs. PetroChina Co Ltd | Chongqing Changan vs. Bank of China | Chongqing Changan vs. Gansu Jiu Steel |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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