Correlation Between China Life and Hangzhou Weiguang
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By analyzing existing cross correlation between China Life Insurance and Hangzhou Weiguang Electronic, you can compare the effects of market volatilities on China Life and Hangzhou Weiguang 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 China Life with a short position of Hangzhou Weiguang. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Life and Hangzhou Weiguang.
Diversification Opportunities for China Life and Hangzhou Weiguang
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between China and Hangzhou is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding China Life Insurance and Hangzhou Weiguang Electronic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hangzhou Weiguang and China Life 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 China Life Insurance are associated (or correlated) with Hangzhou Weiguang. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hangzhou Weiguang has no effect on the direction of China Life i.e., China Life and Hangzhou Weiguang go up and down completely randomly.
Pair Corralation between China Life and Hangzhou Weiguang
Assuming the 90 days trading horizon China Life Insurance is expected to under-perform the Hangzhou Weiguang. In addition to that, China Life is 1.25 times more volatile than Hangzhou Weiguang Electronic. It trades about -0.01 of its total potential returns per unit of risk. Hangzhou Weiguang Electronic is currently generating about 0.2 per unit of volatility. If you would invest 2,195 in Hangzhou Weiguang Electronic on September 3, 2024 and sell it today you would earn a total of 241.00 from holding Hangzhou Weiguang Electronic or generate 10.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
China Life Insurance vs. Hangzhou Weiguang Electronic
Performance |
| Timeline |
| China Life Insurance |
| Hangzhou Weiguang |
China Life and Hangzhou Weiguang Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Life and Hangzhou Weiguang
The main advantage of trading using opposite China Life and Hangzhou Weiguang positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Life position performs unexpectedly, Hangzhou Weiguang 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 Hangzhou Weiguang will offset losses from the drop in Hangzhou Weiguang's long position.| China Life vs. Chongqing Road Bridge | China Life vs. Wuhan Xianglong Power | China Life vs. Empyrean Technology Co | China Life vs. Yuanjie Semiconductor Technology |
| Hangzhou Weiguang vs. Cultural Investment Holdings | Hangzhou Weiguang vs. Gome Telecom Equipment | Hangzhou Weiguang vs. Bus Online Co | Hangzhou Weiguang vs. Holitech Technology Co |
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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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