Correlation Between Beijing Wantai and Linzhou Heavy
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By analyzing existing cross correlation between Beijing Wantai Biological and Linzhou Heavy Machinery, you can compare the effects of market volatilities on Beijing Wantai and Linzhou 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 Beijing Wantai with a short position of Linzhou Heavy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Beijing Wantai and Linzhou Heavy.
Diversification Opportunities for Beijing Wantai and Linzhou Heavy
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Beijing and Linzhou is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Beijing Wantai Biological and Linzhou Heavy Machinery in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Linzhou Heavy Machinery 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 Linzhou Heavy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Linzhou Heavy Machinery has no effect on the direction of Beijing Wantai i.e., Beijing Wantai and Linzhou Heavy go up and down completely randomly.
Pair Corralation between Beijing Wantai and Linzhou Heavy
Assuming the 90 days trading horizon Beijing Wantai Biological is expected to generate 1.02 times more return on investment than Linzhou Heavy. However, Beijing Wantai is 1.02 times more volatile than Linzhou Heavy Machinery. It trades about 0.07 of its potential returns per unit of risk. Linzhou Heavy Machinery is currently generating about 0.01 per unit of risk. If you would invest 4,830 in Beijing Wantai Biological on September 4, 2024 and sell it today you would earn a total of 2,700 from holding Beijing Wantai Biological or generate 55.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Beijing Wantai Biological vs. Linzhou Heavy Machinery
Performance |
| Timeline |
| Beijing Wantai Biological |
| Linzhou Heavy Machinery |
Beijing Wantai and Linzhou Heavy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Beijing Wantai and Linzhou Heavy
The main advantage of trading using opposite Beijing Wantai and Linzhou Heavy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Beijing Wantai position performs unexpectedly, Linzhou 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 Linzhou Heavy will offset losses from the drop in Linzhou Heavy's long position.| Beijing Wantai vs. Hubeiyichang Transportation Group | Beijing Wantai vs. Jiangsu Jinling Sports | Beijing Wantai vs. Sino Platinum Metals Co | Beijing Wantai vs. Qinghaihuading Industrial Co |
| Linzhou Heavy vs. Chengdu Kanghua Biological | Linzhou Heavy vs. Beijing Wantai Biological | Linzhou Heavy vs. Suzhou Novoprotein Scientific | Linzhou Heavy vs. Aluminum Corp of |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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