Correlation Between Shanghai CEO and Chongqing Changan
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By analyzing existing cross correlation between Shanghai CEO Environmental and Chongqing Changan Automobile, you can compare the effects of market volatilities on Shanghai CEO and Chongqing Changan 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 Shanghai CEO with a short position of Chongqing Changan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shanghai CEO and Chongqing Changan.
Diversification Opportunities for Shanghai CEO and Chongqing Changan
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Shanghai and Chongqing is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Shanghai CEO Environmental and Chongqing Changan Automobile in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chongqing Changan and Shanghai CEO 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 Shanghai CEO Environmental are associated (or correlated) with Chongqing Changan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chongqing Changan has no effect on the direction of Shanghai CEO i.e., Shanghai CEO and Chongqing Changan go up and down completely randomly.
Pair Corralation between Shanghai CEO and Chongqing Changan
Assuming the 90 days trading horizon Shanghai CEO Environmental is expected to generate 16.76 times more return on investment than Chongqing Changan. However, Shanghai CEO is 16.76 times more volatile than Chongqing Changan Automobile. It trades about 0.04 of its potential returns per unit of risk. Chongqing Changan Automobile is currently generating about 0.02 per unit of risk. If you would invest 2,133 in Shanghai CEO Environmental on September 28, 2024 and sell it today you would lose (1,253) from holding Shanghai CEO Environmental or give up 58.74% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.79% |
| Values | Daily Returns |
Shanghai CEO Environmental vs. Chongqing Changan Automobile
Performance |
| Timeline |
| Shanghai CEO Environ |
| Chongqing Changan |
Shanghai CEO and Chongqing Changan Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shanghai CEO and Chongqing Changan
The main advantage of trading using opposite Shanghai CEO and Chongqing Changan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shanghai CEO position performs unexpectedly, Chongqing Changan 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 Changan will offset losses from the drop in Chongqing Changan's long position.| Shanghai CEO vs. Offshore Oil Engineering | Shanghai CEO vs. Jiangsu Financial Leasing | Shanghai CEO vs. HeNan Splendor Science | Shanghai CEO vs. Southern PublishingMedia Co |
| Chongqing Changan vs. Qingdao Citymedia Co | Chongqing Changan vs. Guangzhou Jinyi Media | Chongqing Changan vs. Shuhua Sports Co | Chongqing Changan vs. Shanghai CEO Environmental |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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