Correlation Between Western Securities and North Huajin
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By analyzing existing cross correlation between Western Securities Co and North Huajin Chemical, you can compare the effects of market volatilities on Western Securities and North Huajin 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 Western Securities with a short position of North Huajin. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Securities and North Huajin.
Diversification Opportunities for Western Securities and North Huajin
0.95 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Western and North is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Western Securities Co and North Huajin Chemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on North Huajin Chemical and Western Securities 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 Western Securities Co are associated (or correlated) with North Huajin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of North Huajin Chemical has no effect on the direction of Western Securities i.e., Western Securities and North Huajin go up and down completely randomly.
Pair Corralation between Western Securities and North Huajin
Assuming the 90 days trading horizon Western Securities Co is expected to generate 1.24 times more return on investment than North Huajin. However, Western Securities is 1.24 times more volatile than North Huajin Chemical. It trades about 0.04 of its potential returns per unit of risk. North Huajin Chemical is currently generating about -0.02 per unit of risk. If you would invest 799.00 in Western Securities Co on December 10, 2024 and sell it today you would earn a total of 10.00 from holding Western Securities Co or generate 1.25% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Strong |
Accuracy | 100.0% |
Values | Daily Returns |
Western Securities Co vs. North Huajin Chemical
Performance |
Timeline |
Western Securities |
North Huajin Chemical |
Western Securities and North Huajin Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Western Securities and North Huajin
The main advantage of trading using opposite Western Securities and North Huajin positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Securities position performs unexpectedly, North Huajin 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 North Huajin will offset losses from the drop in North Huajin's long position.Western Securities vs. Shandong Mining Machinery | Western Securities vs. Ningbo Tip Rubber | Western Securities vs. Guocheng Mining Co | Western Securities vs. Ningxia Building Materials |
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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 Global Correlations module to find global opportunities by holding instruments from different markets.
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