Correlation Between Beijing Kingsoft and Weichai Heavy
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By analyzing existing cross correlation between Beijing Kingsoft Office and Weichai Heavy Machinery, you can compare the effects of market volatilities on Beijing Kingsoft and Weichai 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 Kingsoft with a short position of Weichai Heavy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Beijing Kingsoft and Weichai Heavy.
Diversification Opportunities for Beijing Kingsoft and Weichai Heavy
0.06 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Beijing and Weichai is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Beijing Kingsoft Office and Weichai Heavy Machinery in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Weichai Heavy Machinery and Beijing Kingsoft 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 Kingsoft Office are associated (or correlated) with Weichai Heavy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Weichai Heavy Machinery has no effect on the direction of Beijing Kingsoft i.e., Beijing Kingsoft and Weichai Heavy go up and down completely randomly.
Pair Corralation between Beijing Kingsoft and Weichai Heavy
Assuming the 90 days trading horizon Beijing Kingsoft is expected to generate 17.45 times less return on investment than Weichai Heavy. But when comparing it to its historical volatility, Beijing Kingsoft Office is 1.28 times less risky than Weichai Heavy. It trades about 0.02 of its potential returns per unit of risk. Weichai Heavy Machinery is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest 998.00 in Weichai Heavy Machinery on October 14, 2024 and sell it today you would earn a total of 862.00 from holding Weichai Heavy Machinery or generate 86.37% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Beijing Kingsoft Office vs. Weichai Heavy Machinery
Performance |
| Timeline |
| Beijing Kingsoft Office |
| Weichai Heavy Machinery |
Beijing Kingsoft and Weichai Heavy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Beijing Kingsoft and Weichai Heavy
The main advantage of trading using opposite Beijing Kingsoft and Weichai Heavy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Beijing Kingsoft position performs unexpectedly, Weichai 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 Weichai Heavy will offset losses from the drop in Weichai Heavy's long position.| Beijing Kingsoft vs. Threes Company Media | Beijing Kingsoft vs. Sportsoul Co Ltd | Beijing Kingsoft vs. Yankershop Food Co | Beijing Kingsoft vs. Omnijoi Media Corp |
| Weichai Heavy vs. Hangzhou Guotai Environmental | Weichai Heavy vs. Tongyu Communication | Weichai Heavy vs. Beijing Kingsoft Office | Weichai Heavy vs. Porton Fine Chemicals |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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