Correlation Between Cambricon Technologies and Guangdong Qunxing
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By analyzing existing cross correlation between Cambricon Technologies Corp and Guangdong Qunxing Toys, you can compare the effects of market volatilities on Cambricon Technologies and Guangdong Qunxing 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 Cambricon Technologies with a short position of Guangdong Qunxing. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cambricon Technologies and Guangdong Qunxing.
Diversification Opportunities for Cambricon Technologies and Guangdong Qunxing
0.17 | Correlation Coefficient |
Average diversification
The 3 months correlation between Cambricon and Guangdong is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Cambricon Technologies Corp and Guangdong Qunxing Toys in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guangdong Qunxing Toys and Cambricon Technologies 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 Cambricon Technologies Corp are associated (or correlated) with Guangdong Qunxing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guangdong Qunxing Toys has no effect on the direction of Cambricon Technologies i.e., Cambricon Technologies and Guangdong Qunxing go up and down completely randomly.
Pair Corralation between Cambricon Technologies and Guangdong Qunxing
Assuming the 90 days trading horizon Cambricon Technologies Corp is expected to generate 1.22 times more return on investment than Guangdong Qunxing. However, Cambricon Technologies is 1.22 times more volatile than Guangdong Qunxing Toys. It trades about 0.36 of its potential returns per unit of risk. Guangdong Qunxing Toys is currently generating about 0.42 per unit of risk. If you would invest 57,200 in Cambricon Technologies Corp on November 28, 2024 and sell it today you would earn a total of 21,838 from holding Cambricon Technologies Corp or generate 38.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 94.12% |
| Values | Daily Returns |
Cambricon Technologies Corp vs. Guangdong Qunxing Toys
Performance |
| Timeline |
| Cambricon Technologies |
| Guangdong Qunxing Toys |
Cambricon Technologies and Guangdong Qunxing Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cambricon Technologies and Guangdong Qunxing
The main advantage of trading using opposite Cambricon Technologies and Guangdong Qunxing positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cambricon Technologies position performs unexpectedly, Guangdong Qunxing 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 Guangdong Qunxing will offset losses from the drop in Guangdong Qunxing's long position.The idea behind Cambricon Technologies Corp and Guangdong Qunxing Toys 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.
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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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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