Correlation Between Caihong Display and Zhonghang Electronic
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By analyzing existing cross correlation between Caihong Display Devices and Zhonghang Electronic Measuring, you can compare the effects of market volatilities on Caihong Display and Zhonghang Electronic 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 Caihong Display with a short position of Zhonghang Electronic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Caihong Display and Zhonghang Electronic.
Diversification Opportunities for Caihong Display and Zhonghang Electronic
0.02 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Caihong and Zhonghang is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Caihong Display Devices and Zhonghang Electronic Measuring in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zhonghang Electronic and Caihong Display 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 Caihong Display Devices are associated (or correlated) with Zhonghang Electronic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zhonghang Electronic has no effect on the direction of Caihong Display i.e., Caihong Display and Zhonghang Electronic go up and down completely randomly.
Pair Corralation between Caihong Display and Zhonghang Electronic
Assuming the 90 days trading horizon Caihong Display Devices is expected to generate 0.75 times more return on investment than Zhonghang Electronic. However, Caihong Display Devices is 1.33 times less risky than Zhonghang Electronic. It trades about 0.08 of its potential returns per unit of risk. Zhonghang Electronic Measuring is currently generating about -0.09 per unit of risk. If you would invest 759.00 in Caihong Display Devices on November 7, 2024 and sell it today you would earn a total of 89.00 from holding Caihong Display Devices or generate 11.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Caihong Display Devices vs. Zhonghang Electronic Measuring
Performance |
| Timeline |
| Caihong Display Devices |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
OK
| Zhonghang Electronic |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Caihong Display and Zhonghang Electronic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Caihong Display and Zhonghang Electronic
The main advantage of trading using opposite Caihong Display and Zhonghang Electronic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Caihong Display position performs unexpectedly, Zhonghang Electronic 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 Zhonghang Electronic will offset losses from the drop in Zhonghang Electronic's long position.The idea behind Caihong Display Devices and Zhonghang Electronic Measuring pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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