Correlation Between New China and Zhonghong Pulin
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By analyzing existing cross correlation between New China Life and Zhonghong Pulin Medical, you can compare the effects of market volatilities on New China and Zhonghong Pulin 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 New China with a short position of Zhonghong Pulin. Check out your portfolio center. Please also check ongoing floating volatility patterns of New China and Zhonghong Pulin.
Diversification Opportunities for New China and Zhonghong Pulin
0.23 | Correlation Coefficient |
Modest diversification
The 3 months correlation between New and Zhonghong is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding New China Life and Zhonghong Pulin Medical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zhonghong Pulin Medical and New China 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 New China Life are associated (or correlated) with Zhonghong Pulin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zhonghong Pulin Medical has no effect on the direction of New China i.e., New China and Zhonghong Pulin go up and down completely randomly.
Pair Corralation between New China and Zhonghong Pulin
Assuming the 90 days trading horizon New China Life is expected to generate 0.92 times more return on investment than Zhonghong Pulin. However, New China Life is 1.08 times less risky than Zhonghong Pulin. It trades about -0.25 of its potential returns per unit of risk. Zhonghong Pulin Medical is currently generating about -0.47 per unit of risk. If you would invest 4,953 in New China Life on October 15, 2024 and sell it today you would lose (452.00) from holding New China Life or give up 9.13% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
New China Life vs. Zhonghong Pulin Medical
Performance |
| Timeline |
| New China Life |
| Zhonghong Pulin Medical |
New China and Zhonghong Pulin Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with New China and Zhonghong Pulin
The main advantage of trading using opposite New China and Zhonghong Pulin positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if New China position performs unexpectedly, Zhonghong Pulin 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 Zhonghong Pulin will offset losses from the drop in Zhonghong Pulin's long position.| New China vs. Jahen Household Products | New China vs. Xiangyu Medical Co | New China vs. Zhejiang Qianjiang Motorcycle | New China vs. Zhonghong Pulin Medical |
| Zhonghong Pulin vs. Liaoning Dingjide Petrochemical | Zhonghong Pulin vs. China Mobile Limited | Zhonghong Pulin vs. Xinxiang Chemical Fiber | Zhonghong Pulin vs. Longxing Chemical Stock |
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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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