Correlation Between China Everbright and Jiangxi Hengda
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By analyzing existing cross correlation between China Everbright Bank and Jiangxi Hengda Hi Tech, you can compare the effects of market volatilities on China Everbright and Jiangxi Hengda 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 Everbright with a short position of Jiangxi Hengda. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Everbright and Jiangxi Hengda.
Diversification Opportunities for China Everbright and Jiangxi Hengda
-0.05 | Correlation Coefficient |
Good diversification
The 3 months correlation between China and Jiangxi is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding China Everbright Bank and Jiangxi Hengda Hi Tech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jiangxi Hengda Hi and China Everbright 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 Everbright Bank are associated (or correlated) with Jiangxi Hengda. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jiangxi Hengda Hi has no effect on the direction of China Everbright i.e., China Everbright and Jiangxi Hengda go up and down completely randomly.
Pair Corralation between China Everbright and Jiangxi Hengda
Assuming the 90 days trading horizon China Everbright Bank is expected to generate 0.39 times more return on investment than Jiangxi Hengda. However, China Everbright Bank is 2.54 times less risky than Jiangxi Hengda. It trades about 0.07 of its potential returns per unit of risk. Jiangxi Hengda Hi Tech is currently generating about -0.02 per unit of risk. If you would invest 298.00 in China Everbright Bank on November 9, 2024 and sell it today you would earn a total of 79.00 from holding China Everbright Bank or generate 26.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
China Everbright Bank vs. Jiangxi Hengda Hi Tech
Performance |
| Timeline |
| China Everbright Bank |
Risk-Adjusted Performance
OK
Weak | Strong |
| Jiangxi Hengda Hi |
Risk-Adjusted Performance
Very Weak
Weak | Strong |
China Everbright and Jiangxi Hengda Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Everbright and Jiangxi Hengda
The main advantage of trading using opposite China Everbright and Jiangxi Hengda positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Everbright position performs unexpectedly, Jiangxi Hengda 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 Jiangxi Hengda will offset losses from the drop in Jiangxi Hengda's long position.The idea behind China Everbright Bank and Jiangxi Hengda Hi Tech 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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