Correlation Between Hefei Metalforming and Weihai Honglin
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By analyzing existing cross correlation between Hefei Metalforming Mach and Weihai Honglin Electronic, you can compare the effects of market volatilities on Hefei Metalforming and Weihai Honglin 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 Hefei Metalforming with a short position of Weihai Honglin. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hefei Metalforming and Weihai Honglin.
Diversification Opportunities for Hefei Metalforming and Weihai Honglin
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Hefei and Weihai is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Hefei Metalforming Mach and Weihai Honglin Electronic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Weihai Honglin Electronic and Hefei Metalforming 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 Hefei Metalforming Mach are associated (or correlated) with Weihai Honglin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Weihai Honglin Electronic has no effect on the direction of Hefei Metalforming i.e., Hefei Metalforming and Weihai Honglin go up and down completely randomly.
Pair Corralation between Hefei Metalforming and Weihai Honglin
Assuming the 90 days trading horizon Hefei Metalforming Mach is expected to generate 1.05 times more return on investment than Weihai Honglin. However, Hefei Metalforming is 1.05 times more volatile than Weihai Honglin Electronic. It trades about 0.15 of its potential returns per unit of risk. Weihai Honglin Electronic is currently generating about -0.01 per unit of risk. If you would invest 741.00 in Hefei Metalforming Mach on August 25, 2024 and sell it today you would earn a total of 79.00 from holding Hefei Metalforming Mach or generate 10.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hefei Metalforming Mach vs. Weihai Honglin Electronic
Performance |
| Timeline |
| Hefei Metalforming Mach |
| Weihai Honglin Electronic |
Hefei Metalforming and Weihai Honglin Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hefei Metalforming and Weihai Honglin
The main advantage of trading using opposite Hefei Metalforming and Weihai Honglin positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hefei Metalforming position performs unexpectedly, Weihai Honglin 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 Weihai Honglin will offset losses from the drop in Weihai Honglin's long position.The idea behind Hefei Metalforming Mach and Weihai Honglin Electronic 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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