Correlation Between Hefei Metalforming and Changchun Faway
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By analyzing existing cross correlation between Hefei Metalforming Mach and Changchun Faway Automobile, you can compare the effects of market volatilities on Hefei Metalforming and Changchun Faway 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 Changchun Faway. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hefei Metalforming and Changchun Faway.
Diversification Opportunities for Hefei Metalforming and Changchun Faway
0.97 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Hefei and Changchun is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding Hefei Metalforming Mach and Changchun Faway Automobile in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Changchun Faway Auto 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 Changchun Faway. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Changchun Faway Auto has no effect on the direction of Hefei Metalforming i.e., Hefei Metalforming and Changchun Faway go up and down completely randomly.
Pair Corralation between Hefei Metalforming and Changchun Faway
Assuming the 90 days trading horizon Hefei Metalforming Mach is expected to generate 1.7 times more return on investment than Changchun Faway. However, Hefei Metalforming is 1.7 times more volatile than Changchun Faway Automobile. It trades about 0.07 of its potential returns per unit of risk. Changchun Faway Automobile is currently generating about 0.09 per unit of risk. If you would invest 743.00 in Hefei Metalforming Mach on September 1, 2024 and sell it today you would earn a total of 36.00 from holding Hefei Metalforming Mach or generate 4.85% 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. Changchun Faway Automobile
Performance |
| Timeline |
| Hefei Metalforming Mach |
| Changchun Faway Auto |
Hefei Metalforming and Changchun Faway Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hefei Metalforming and Changchun Faway
The main advantage of trading using opposite Hefei Metalforming and Changchun Faway positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hefei Metalforming position performs unexpectedly, Changchun Faway 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 Changchun Faway will offset losses from the drop in Changchun Faway's long position.The idea behind Hefei Metalforming Mach and Changchun Faway Automobile 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.
| Changchun Faway vs. Hefei Metalforming Mach | Changchun Faway vs. Shanghai Jinfeng Wine | Changchun Faway vs. Anhui Gujing Distillery | Changchun Faway vs. Duzhe Publishing Media |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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