Correlation Between Beijing Wantai and Wuxi Chemical
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By analyzing existing cross correlation between Beijing Wantai Biological and Wuxi Chemical Equipment, you can compare the effects of market volatilities on Beijing Wantai and Wuxi Chemical 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 Beijing Wantai with a short position of Wuxi Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Beijing Wantai and Wuxi Chemical.
Diversification Opportunities for Beijing Wantai and Wuxi Chemical
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Beijing and Wuxi is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Beijing Wantai Biological and Wuxi Chemical Equipment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wuxi Chemical Equipment and Beijing Wantai 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 Beijing Wantai Biological are associated (or correlated) with Wuxi Chemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wuxi Chemical Equipment has no effect on the direction of Beijing Wantai i.e., Beijing Wantai and Wuxi Chemical go up and down completely randomly.
Pair Corralation between Beijing Wantai and Wuxi Chemical
Assuming the 90 days trading horizon Beijing Wantai is expected to generate 2.63 times less return on investment than Wuxi Chemical. But when comparing it to its historical volatility, Beijing Wantai Biological is 1.16 times less risky than Wuxi Chemical. It trades about 0.09 of its potential returns per unit of risk. Wuxi Chemical Equipment is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest 2,630 in Wuxi Chemical Equipment on September 13, 2024 and sell it today you would earn a total of 971.00 from holding Wuxi Chemical Equipment or generate 36.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Beijing Wantai Biological vs. Wuxi Chemical Equipment
Performance |
| Timeline |
| Beijing Wantai Biological |
| Wuxi Chemical Equipment |
Beijing Wantai and Wuxi Chemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Beijing Wantai and Wuxi Chemical
The main advantage of trading using opposite Beijing Wantai and Wuxi Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Beijing Wantai position performs unexpectedly, Wuxi Chemical 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 Wuxi Chemical will offset losses from the drop in Wuxi Chemical's long position.| Beijing Wantai vs. Jiangsu Yanghe Brewery | Beijing Wantai vs. Ningxia Building Materials | Beijing Wantai vs. Super Dragon Engineering Plastics | Beijing Wantai vs. Sinosteel Luonai Materials |
| Wuxi Chemical vs. Zhongshan Public Utilities | Wuxi Chemical vs. Dongfeng Automobile Co | Wuxi Chemical vs. Zhongtong Guomai Communication | Wuxi Chemical vs. Wuhan Yangtze Communication |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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