Correlation Between Chongqing Landai and East Money

Can any of the company-specific risk be diversified away by investing in both Chongqing Landai and East Money at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Chongqing Landai and East Money into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Chongqing Landai Powertrain and East Money Information, you can compare the effects of market volatilities on Chongqing Landai and East Money 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 Chongqing Landai with a short position of East Money. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chongqing Landai and East Money.

Diversification Opportunities for Chongqing Landai and East Money

0.45

Correlation Coefficient

Chongqing Landai  East Money

Very weak diversification

The 3 months correlation between Chongqing and East is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Chongqing Landai Powertrain and East Money Information in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on East Money Information and Chongqing Landai 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 Chongqing Landai Powertrain are associated (or correlated) with East Money. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of East Money Information has no effect on the direction of Chongqing Landai i.e., Chongqing Landai and East Money go up and down completely randomly.

Pair Corralation between Chongqing Landai and East Money

Assuming the 90 days trading horizon Chongqing Landai Powertrain is expected to generate 1.58 times more return on investment than East Money. However, Chongqing Landai is 1.58 times more volatile than East Money Information. It trades about 0.17 of its potential returns per unit of risk. East Money Information is currently generating about 0.04 per unit of risk. If you would invest  580.00  in Chongqing Landai Powertrain on October 25, 2024 and sell it today you would earn a total of  427.00  from holding Chongqing Landai Powertrain or generate 73.62% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.44%
Values	Daily Returns

Chongqing Landai Powertrain  vs.  East Money Information

Chongqing Landai Pow

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Chongqing Landai Powertrain are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Chongqing Landai sustained solid returns over the last few months and may actually be approaching a breakup point.

East Money Information

Risk-Adjusted Performance

2 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in East Money Information are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, East Money may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Chongqing Landai and East Money

The main advantage of trading using opposite Chongqing Landai and East Money positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chongqing Landai position performs unexpectedly, East Money 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 East Money will offset losses from the drop in East Money's long position.

The idea behind Chongqing Landai Powertrain and East Money Information pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.