Correlation Between Chengtun Mining and Wanhua Chemical
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By analyzing existing cross correlation between Chengtun Mining Group and Wanhua Chemical Group, you can compare the effects of market volatilities on Chengtun Mining and Wanhua 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 Chengtun Mining with a short position of Wanhua Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chengtun Mining and Wanhua Chemical.
Diversification Opportunities for Chengtun Mining and Wanhua Chemical
0.06 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Chengtun and Wanhua is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Chengtun Mining Group and Wanhua Chemical Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wanhua Chemical Group and Chengtun Mining 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 Chengtun Mining Group are associated (or correlated) with Wanhua Chemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wanhua Chemical Group has no effect on the direction of Chengtun Mining i.e., Chengtun Mining and Wanhua Chemical go up and down completely randomly.
Pair Corralation between Chengtun Mining and Wanhua Chemical
Assuming the 90 days trading horizon Chengtun Mining Group is expected to generate 1.53 times more return on investment than Wanhua Chemical. However, Chengtun Mining is 1.53 times more volatile than Wanhua Chemical Group. It trades about 0.23 of its potential returns per unit of risk. Wanhua Chemical Group is currently generating about -0.12 per unit of risk. If you would invest 472.00 in Chengtun Mining Group on November 7, 2024 and sell it today you would earn a total of 34.00 from holding Chengtun Mining Group or generate 7.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Chengtun Mining Group vs. Wanhua Chemical Group
Performance |
| Timeline |
| Chengtun Mining Group |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Wanhua Chemical Group |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Chengtun Mining and Wanhua Chemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chengtun Mining and Wanhua Chemical
The main advantage of trading using opposite Chengtun Mining and Wanhua Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chengtun Mining position performs unexpectedly, Wanhua 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 Wanhua Chemical will offset losses from the drop in Wanhua Chemical's long position.The idea behind Chengtun Mining Group and Wanhua Chemical Group 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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