Correlation Between Beijing YanDong and Chongqing Sulian
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By analyzing existing cross correlation between Beijing YanDong MicroElectronic and Chongqing Sulian Plastic, you can compare the effects of market volatilities on Beijing YanDong and Chongqing Sulian 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 YanDong with a short position of Chongqing Sulian. Check out your portfolio center. Please also check ongoing floating volatility patterns of Beijing YanDong and Chongqing Sulian.
Diversification Opportunities for Beijing YanDong and Chongqing Sulian
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Beijing and Chongqing is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Beijing YanDong MicroElectroni and Chongqing Sulian Plastic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chongqing Sulian Plastic and Beijing YanDong 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 YanDong MicroElectronic are associated (or correlated) with Chongqing Sulian. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chongqing Sulian Plastic has no effect on the direction of Beijing YanDong i.e., Beijing YanDong and Chongqing Sulian go up and down completely randomly.
Pair Corralation between Beijing YanDong and Chongqing Sulian
Assuming the 90 days trading horizon Beijing YanDong MicroElectronic is expected to generate 0.89 times more return on investment than Chongqing Sulian. However, Beijing YanDong MicroElectronic is 1.12 times less risky than Chongqing Sulian. It trades about 0.01 of its potential returns per unit of risk. Chongqing Sulian Plastic is currently generating about 0.0 per unit of risk. If you would invest 2,169 in Beijing YanDong MicroElectronic on November 9, 2024 and sell it today you would lose (103.00) from holding Beijing YanDong MicroElectronic or give up 4.75% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 81.89% |
| Values | Daily Returns |
Beijing YanDong MicroElectroni vs. Chongqing Sulian Plastic
Performance |
| Timeline |
| Beijing YanDong Micr |
Risk-Adjusted Performance
Very Weak
Weak | Strong |
| Chongqing Sulian Plastic |
Risk-Adjusted Performance
Weak
Weak | Strong |
Beijing YanDong and Chongqing Sulian Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Beijing YanDong and Chongqing Sulian
The main advantage of trading using opposite Beijing YanDong and Chongqing Sulian positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Beijing YanDong position performs unexpectedly, Chongqing Sulian 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 Chongqing Sulian will offset losses from the drop in Chongqing Sulian's long position.The idea behind Beijing YanDong MicroElectronic and Chongqing Sulian Plastic 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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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