Correlation Between Changjiang Publishing and Hengli Petrochemical
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By analyzing existing cross correlation between Changjiang Publishing Media and Hengli Petrochemical Co, you can compare the effects of market volatilities on Changjiang Publishing and Hengli Petrochemical 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 Changjiang Publishing with a short position of Hengli Petrochemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Changjiang Publishing and Hengli Petrochemical.
Diversification Opportunities for Changjiang Publishing and Hengli Petrochemical
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Changjiang and Hengli is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Changjiang Publishing Media and Hengli Petrochemical Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hengli Petrochemical and Changjiang Publishing 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 Changjiang Publishing Media are associated (or correlated) with Hengli Petrochemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hengli Petrochemical has no effect on the direction of Changjiang Publishing i.e., Changjiang Publishing and Hengli Petrochemical go up and down completely randomly.
Pair Corralation between Changjiang Publishing and Hengli Petrochemical
Assuming the 90 days trading horizon Changjiang Publishing Media is expected to under-perform the Hengli Petrochemical. In addition to that, Changjiang Publishing is 2.21 times more volatile than Hengli Petrochemical Co. It trades about -0.07 of its total potential returns per unit of risk. Hengli Petrochemical Co is currently generating about -0.03 per unit of volatility. If you would invest 1,515 in Hengli Petrochemical Co on October 17, 2024 and sell it today you would lose (11.00) from holding Hengli Petrochemical Co or give up 0.73% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Changjiang Publishing Media vs. Hengli Petrochemical Co
Performance |
| Timeline |
| Changjiang Publishing |
| Hengli Petrochemical |
Changjiang Publishing and Hengli Petrochemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Changjiang Publishing and Hengli Petrochemical
The main advantage of trading using opposite Changjiang Publishing and Hengli Petrochemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Changjiang Publishing position performs unexpectedly, Hengli Petrochemical 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 Hengli Petrochemical will offset losses from the drop in Hengli Petrochemical's long position.The idea behind Changjiang Publishing Media and Hengli Petrochemical Co 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.
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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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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