Correlation Between Sichuan Hebang and Wintao Communications
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By analyzing existing cross correlation between Sichuan Hebang Biotechnology and Wintao Communications Co, you can compare the effects of market volatilities on Sichuan Hebang and Wintao Communications 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 Sichuan Hebang with a short position of Wintao Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sichuan Hebang and Wintao Communications.
Diversification Opportunities for Sichuan Hebang and Wintao Communications
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Sichuan and Wintao is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Sichuan Hebang Biotechnology and Wintao Communications Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wintao Communications and Sichuan Hebang 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 Sichuan Hebang Biotechnology are associated (or correlated) with Wintao Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wintao Communications has no effect on the direction of Sichuan Hebang i.e., Sichuan Hebang and Wintao Communications go up and down completely randomly.
Pair Corralation between Sichuan Hebang and Wintao Communications
Assuming the 90 days trading horizon Sichuan Hebang Biotechnology is expected to under-perform the Wintao Communications. But the stock apears to be less risky and, when comparing its historical volatility, Sichuan Hebang Biotechnology is 1.9 times less risky than Wintao Communications. The stock trades about -0.16 of its potential returns per unit of risk. The Wintao Communications Co is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest 2,095 in Wintao Communications Co on November 8, 2024 and sell it today you would earn a total of 239.00 from holding Wintao Communications Co or generate 11.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 94.12% |
| Values | Daily Returns |
Sichuan Hebang Biotechnology vs. Wintao Communications Co
Performance |
| Timeline |
| Sichuan Hebang Biote |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Wintao Communications |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Sichuan Hebang and Wintao Communications Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sichuan Hebang and Wintao Communications
The main advantage of trading using opposite Sichuan Hebang and Wintao Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sichuan Hebang position performs unexpectedly, Wintao Communications 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 Wintao Communications will offset losses from the drop in Wintao Communications' long position.The idea behind Sichuan Hebang Biotechnology and Wintao Communications Co 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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