Correlation Between Eastern Communications and Wuxi Chemical
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By analyzing existing cross correlation between Eastern Communications Co and Wuxi Chemical Equipment, you can compare the effects of market volatilities on Eastern Communications and Wuxi Chemical 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 Eastern Communications with a short position of Wuxi Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eastern Communications and Wuxi Chemical.
Diversification Opportunities for Eastern Communications and Wuxi Chemical
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Eastern and Wuxi is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Eastern Communications Co and Wuxi Chemical Equipment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wuxi Chemical Equipment and Eastern Communications 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 Eastern Communications Co are associated (or correlated) with Wuxi Chemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wuxi Chemical Equipment has no effect on the direction of Eastern Communications i.e., Eastern Communications and Wuxi Chemical go up and down completely randomly.
Pair Corralation between Eastern Communications and Wuxi Chemical
Assuming the 90 days trading horizon Eastern Communications is expected to generate 1.0 times less return on investment than Wuxi Chemical. But when comparing it to its historical volatility, Eastern Communications Co is 1.02 times less risky than Wuxi Chemical. It trades about 0.05 of its potential returns per unit of risk. Wuxi Chemical Equipment is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 3,557 in Wuxi Chemical Equipment on September 1, 2024 and sell it today you would earn a total of 84.00 from holding Wuxi Chemical Equipment or generate 2.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Eastern Communications Co vs. Wuxi Chemical Equipment
Performance |
| Timeline |
| Eastern Communications |
| Wuxi Chemical Equipment |
Eastern Communications and Wuxi Chemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Eastern Communications and Wuxi Chemical
The main advantage of trading using opposite Eastern Communications and Wuxi Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eastern Communications position performs unexpectedly, Wuxi Chemical 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 Wuxi Chemical will offset losses from the drop in Wuxi Chemical's long position.| Eastern Communications vs. Wuxi Chemical Equipment | Eastern Communications vs. Yangmei Chemical Co | Eastern Communications vs. Lander Sports Development | Eastern Communications vs. Jiangsu Jinling Sports |
| Wuxi Chemical vs. ZYF Lopsking Aluminum | Wuxi Chemical vs. Western Metal Materials | Wuxi Chemical vs. Fiberhome Telecommunication Technologies | Wuxi Chemical vs. Xiangyang Automobile Bearing |
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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