Correlation Between Changchun BCHT and Chengdu Kanghua
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By analyzing existing cross correlation between Changchun BCHT Biotechnology and Chengdu Kanghua Biological, you can compare the effects of market volatilities on Changchun BCHT and Chengdu Kanghua 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 Changchun BCHT with a short position of Chengdu Kanghua. Check out your portfolio center. Please also check ongoing floating volatility patterns of Changchun BCHT and Chengdu Kanghua.
Diversification Opportunities for Changchun BCHT and Chengdu Kanghua
0.98 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Changchun and Chengdu is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding Changchun BCHT Biotechnology and Chengdu Kanghua Biological in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chengdu Kanghua Biol and Changchun BCHT 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 Changchun BCHT Biotechnology are associated (or correlated) with Chengdu Kanghua. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chengdu Kanghua Biol has no effect on the direction of Changchun BCHT i.e., Changchun BCHT and Chengdu Kanghua go up and down completely randomly.
Pair Corralation between Changchun BCHT and Chengdu Kanghua
Assuming the 90 days trading horizon Changchun BCHT Biotechnology is expected to under-perform the Chengdu Kanghua. But the stock apears to be less risky and, when comparing its historical volatility, Changchun BCHT Biotechnology is 1.08 times less risky than Chengdu Kanghua. The stock trades about -0.09 of its potential returns per unit of risk. The Chengdu Kanghua Biological is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest 7,248 in Chengdu Kanghua Biological on September 4, 2024 and sell it today you would lose (1,479) from holding Chengdu Kanghua Biological or give up 20.41% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Changchun BCHT Biotechnology vs. Chengdu Kanghua Biological
Performance |
| Timeline |
| Changchun BCHT Biote |
| Chengdu Kanghua Biol |
Changchun BCHT and Chengdu Kanghua Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Changchun BCHT and Chengdu Kanghua
The main advantage of trading using opposite Changchun BCHT and Chengdu Kanghua positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Changchun BCHT position performs unexpectedly, Chengdu Kanghua 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 Chengdu Kanghua will offset losses from the drop in Chengdu Kanghua's long position.| Changchun BCHT vs. Industrial and Commercial | Changchun BCHT vs. Agricultural Bank of | Changchun BCHT vs. China Construction Bank | Changchun BCHT vs. Bank of China |
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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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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