Correlation Between Shenzhen Transsion and Changchun Engley
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By analyzing existing cross correlation between Shenzhen Transsion Holdings and Changchun Engley Automobile, you can compare the effects of market volatilities on Shenzhen Transsion and Changchun Engley 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 Shenzhen Transsion with a short position of Changchun Engley. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shenzhen Transsion and Changchun Engley.
Diversification Opportunities for Shenzhen Transsion and Changchun Engley
0.17 | Correlation Coefficient |
Average diversification
The 3 months correlation between Shenzhen and Changchun is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Shenzhen Transsion Holdings and Changchun Engley Automobile in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Changchun Engley Aut and Shenzhen Transsion 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 Shenzhen Transsion Holdings are associated (or correlated) with Changchun Engley. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Changchun Engley Aut has no effect on the direction of Shenzhen Transsion i.e., Shenzhen Transsion and Changchun Engley go up and down completely randomly.
Pair Corralation between Shenzhen Transsion and Changchun Engley
Assuming the 90 days trading horizon Shenzhen Transsion Holdings is expected to generate 1.33 times more return on investment than Changchun Engley. However, Shenzhen Transsion is 1.33 times more volatile than Changchun Engley Automobile. It trades about 0.03 of its potential returns per unit of risk. Changchun Engley Automobile is currently generating about -0.02 per unit of risk. If you would invest 8,759 in Shenzhen Transsion Holdings on November 7, 2024 and sell it today you would earn a total of 1,280 from holding Shenzhen Transsion Holdings or generate 14.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Shenzhen Transsion Holdings vs. Changchun Engley Automobile
Performance |
| Timeline |
| Shenzhen Transsion |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Weak
| Changchun Engley Aut |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Shenzhen Transsion and Changchun Engley Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shenzhen Transsion and Changchun Engley
The main advantage of trading using opposite Shenzhen Transsion and Changchun Engley positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shenzhen Transsion position performs unexpectedly, Changchun Engley 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 Changchun Engley will offset losses from the drop in Changchun Engley's long position.The idea behind Shenzhen Transsion Holdings and Changchun Engley Automobile 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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