Correlation Between Heilongjiang Transport and Cambricon Technologies
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By analyzing existing cross correlation between Heilongjiang Transport Development and Cambricon Technologies Corp, you can compare the effects of market volatilities on Heilongjiang Transport and Cambricon Technologies 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 Heilongjiang Transport with a short position of Cambricon Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Heilongjiang Transport and Cambricon Technologies.
Diversification Opportunities for Heilongjiang Transport and Cambricon Technologies
-0.3 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Heilongjiang and Cambricon is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Heilongjiang Transport Develop and Cambricon Technologies Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cambricon Technologies and Heilongjiang Transport 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 Heilongjiang Transport Development are associated (or correlated) with Cambricon Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cambricon Technologies has no effect on the direction of Heilongjiang Transport i.e., Heilongjiang Transport and Cambricon Technologies go up and down completely randomly.
Pair Corralation between Heilongjiang Transport and Cambricon Technologies
Assuming the 90 days trading horizon Heilongjiang Transport Development is expected to under-perform the Cambricon Technologies. But the stock apears to be less risky and, when comparing its historical volatility, Heilongjiang Transport Development is 2.49 times less risky than Cambricon Technologies. The stock trades about -0.17 of its potential returns per unit of risk. The Cambricon Technologies Corp is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest 64,875 in Cambricon Technologies Corp on October 24, 2024 and sell it today you would lose (2,375) from holding Cambricon Technologies Corp or give up 3.66% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Heilongjiang Transport Develop vs. Cambricon Technologies Corp
Performance |
| Timeline |
| Heilongjiang Transport |
| Cambricon Technologies |
Heilongjiang Transport and Cambricon Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Heilongjiang Transport and Cambricon Technologies
The main advantage of trading using opposite Heilongjiang Transport and Cambricon Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Heilongjiang Transport position performs unexpectedly, Cambricon Technologies 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 Cambricon Technologies will offset losses from the drop in Cambricon Technologies' long position.The idea behind Heilongjiang Transport Development and Cambricon Technologies Corp 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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