Correlation Between Changchun Faway and Shaanxi Energy
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By analyzing existing cross correlation between Changchun Faway Automobile and Shaanxi Energy Investment, you can compare the effects of market volatilities on Changchun Faway and Shaanxi Energy 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 Changchun Faway with a short position of Shaanxi Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Changchun Faway and Shaanxi Energy.
Diversification Opportunities for Changchun Faway and Shaanxi Energy
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Changchun and Shaanxi is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Changchun Faway Automobile and Shaanxi Energy Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shaanxi Energy Investment and Changchun Faway 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 Changchun Faway Automobile are associated (or correlated) with Shaanxi Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shaanxi Energy Investment has no effect on the direction of Changchun Faway i.e., Changchun Faway and Shaanxi Energy go up and down completely randomly.
Pair Corralation between Changchun Faway and Shaanxi Energy
Assuming the 90 days trading horizon Changchun Faway Automobile is expected to generate 1.74 times more return on investment than Shaanxi Energy. However, Changchun Faway is 1.74 times more volatile than Shaanxi Energy Investment. It trades about 0.11 of its potential returns per unit of risk. Shaanxi Energy Investment is currently generating about 0.0 per unit of risk. If you would invest 898.00 in Changchun Faway Automobile on September 3, 2024 and sell it today you would earn a total of 45.00 from holding Changchun Faway Automobile or generate 5.01% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Changchun Faway Automobile vs. Shaanxi Energy Investment
Performance |
| Timeline |
| Changchun Faway Auto |
| Shaanxi Energy Investment |
Changchun Faway and Shaanxi Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Changchun Faway and Shaanxi Energy
The main advantage of trading using opposite Changchun Faway and Shaanxi Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Changchun Faway position performs unexpectedly, Shaanxi Energy 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 Shaanxi Energy will offset losses from the drop in Shaanxi Energy's long position.| Changchun Faway vs. PetroChina Co Ltd | Changchun Faway vs. China Mobile Limited | Changchun Faway vs. Industrial and Commercial | Changchun Faway vs. China Life Insurance |
| Shaanxi Energy vs. Gansu Jiu Steel | Shaanxi Energy vs. Ming Yang Smart | Shaanxi Energy vs. Aba Chemicals Corp | Shaanxi Energy vs. Loctek Ergonomic Technology |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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