Correlation Between Liaoning Chengda and Huadong Medicine
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By analyzing existing cross correlation between Liaoning Chengda Biotechnology and Huadong Medicine Co, you can compare the effects of market volatilities on Liaoning Chengda and Huadong Medicine 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 Liaoning Chengda with a short position of Huadong Medicine. Check out your portfolio center. Please also check ongoing floating volatility patterns of Liaoning Chengda and Huadong Medicine.
Diversification Opportunities for Liaoning Chengda and Huadong Medicine
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Liaoning and Huadong is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Liaoning Chengda Biotechnology and Huadong Medicine Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Huadong Medicine and Liaoning Chengda 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 Liaoning Chengda Biotechnology are associated (or correlated) with Huadong Medicine. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Huadong Medicine has no effect on the direction of Liaoning Chengda i.e., Liaoning Chengda and Huadong Medicine go up and down completely randomly.
Pair Corralation between Liaoning Chengda and Huadong Medicine
Assuming the 90 days trading horizon Liaoning Chengda Biotechnology is expected to under-perform the Huadong Medicine. But the stock apears to be less risky and, when comparing its historical volatility, Liaoning Chengda Biotechnology is 1.14 times less risky than Huadong Medicine. The stock trades about -0.03 of its potential returns per unit of risk. The Huadong Medicine Co is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest 4,126 in Huadong Medicine Co on September 26, 2024 and sell it today you would lose (521.00) from holding Huadong Medicine Co or give up 12.63% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 99.66% |
| Values | Daily Returns |
Liaoning Chengda Biotechnology vs. Huadong Medicine Co
Performance |
| Timeline |
| Liaoning Chengda Bio |
| Huadong Medicine |
Liaoning Chengda and Huadong Medicine Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Liaoning Chengda and Huadong Medicine
The main advantage of trading using opposite Liaoning Chengda and Huadong Medicine positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Liaoning Chengda position performs unexpectedly, Huadong Medicine 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 Huadong Medicine will offset losses from the drop in Huadong Medicine's long position.| Liaoning Chengda vs. Industrial and Commercial | Liaoning Chengda vs. Agricultural Bank of | Liaoning Chengda vs. China Construction Bank | Liaoning Chengda vs. Bank of China |
| Huadong Medicine vs. Industrial and Commercial | Huadong Medicine vs. Kweichow Moutai Co | Huadong Medicine vs. Agricultural Bank of | Huadong Medicine vs. China Mobile Limited |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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