Correlation Between Hainan Haiqi and Weichai Heavy
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By analyzing existing cross correlation between Hainan Haiqi Transportation and Weichai Heavy Machinery, you can compare the effects of market volatilities on Hainan Haiqi and Weichai Heavy 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 Hainan Haiqi with a short position of Weichai Heavy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hainan Haiqi and Weichai Heavy.
Diversification Opportunities for Hainan Haiqi and Weichai Heavy
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Hainan and Weichai is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Hainan Haiqi Transportation and Weichai Heavy Machinery in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Weichai Heavy Machinery and Hainan Haiqi 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 Hainan Haiqi Transportation are associated (or correlated) with Weichai Heavy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Weichai Heavy Machinery has no effect on the direction of Hainan Haiqi i.e., Hainan Haiqi and Weichai Heavy go up and down completely randomly.
Pair Corralation between Hainan Haiqi and Weichai Heavy
Assuming the 90 days trading horizon Hainan Haiqi Transportation is expected to under-perform the Weichai Heavy. But the stock apears to be less risky and, when comparing its historical volatility, Hainan Haiqi Transportation is 1.78 times less risky than Weichai Heavy. The stock trades about -0.03 of its potential returns per unit of risk. The Weichai Heavy Machinery is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 1,118 in Weichai Heavy Machinery on August 29, 2024 and sell it today you would earn a total of 131.00 from holding Weichai Heavy Machinery or generate 11.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hainan Haiqi Transportation vs. Weichai Heavy Machinery
Performance |
| Timeline |
| Hainan Haiqi Transpo |
| Weichai Heavy Machinery |
Hainan Haiqi and Weichai Heavy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hainan Haiqi and Weichai Heavy
The main advantage of trading using opposite Hainan Haiqi and Weichai Heavy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hainan Haiqi position performs unexpectedly, Weichai Heavy 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 Weichai Heavy will offset losses from the drop in Weichai Heavy's long position.| Hainan Haiqi vs. Cambricon Technologies Corp | Hainan Haiqi vs. Loongson Technology Corp | Hainan Haiqi vs. Chongqing Road Bridge | Hainan Haiqi vs. Shenzhen Fortune Trend |
| Weichai Heavy vs. China Asset Management | Weichai Heavy vs. Harvest Fund Management | Weichai Heavy vs. JCHX Mining Management | Weichai Heavy vs. AVIC Fund Management |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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