Correlation Between Chahua Modern and Longxing Chemical
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By analyzing existing cross correlation between Chahua Modern Housewares and Longxing Chemical Stock, you can compare the effects of market volatilities on Chahua Modern and Longxing 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 Chahua Modern with a short position of Longxing Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chahua Modern and Longxing Chemical.
Diversification Opportunities for Chahua Modern and Longxing Chemical
0.01 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Chahua and Longxing is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Chahua Modern Housewares and Longxing Chemical Stock in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Longxing Chemical Stock and Chahua Modern 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 Chahua Modern Housewares are associated (or correlated) with Longxing Chemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Longxing Chemical Stock has no effect on the direction of Chahua Modern i.e., Chahua Modern and Longxing Chemical go up and down completely randomly.
Pair Corralation between Chahua Modern and Longxing Chemical
Assuming the 90 days trading horizon Chahua Modern Housewares is expected to generate 1.47 times more return on investment than Longxing Chemical. However, Chahua Modern is 1.47 times more volatile than Longxing Chemical Stock. It trades about 0.08 of its potential returns per unit of risk. Longxing Chemical Stock is currently generating about 0.07 per unit of risk. If you would invest 1,284 in Chahua Modern Housewares on November 8, 2024 and sell it today you would earn a total of 1,021 from holding Chahua Modern Housewares or generate 79.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Chahua Modern Housewares vs. Longxing Chemical Stock
Performance |
| Timeline |
| Chahua Modern Housewares |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Modest
| Longxing Chemical Stock |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Insignificant
Chahua Modern and Longxing Chemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chahua Modern and Longxing Chemical
The main advantage of trading using opposite Chahua Modern and Longxing Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chahua Modern position performs unexpectedly, Longxing 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 Longxing Chemical will offset losses from the drop in Longxing Chemical's long position.The idea behind Chahua Modern Housewares and Longxing Chemical Stock 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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