Correlation Between Beijing Enlight and Chongqing Sulian
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By analyzing existing cross correlation between Beijing Enlight Media and Chongqing Sulian Plastic, you can compare the effects of market volatilities on Beijing Enlight and Chongqing Sulian 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 Beijing Enlight with a short position of Chongqing Sulian. Check out your portfolio center. Please also check ongoing floating volatility patterns of Beijing Enlight and Chongqing Sulian.
Diversification Opportunities for Beijing Enlight and Chongqing Sulian
0.48 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Beijing and Chongqing is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Beijing Enlight Media and Chongqing Sulian Plastic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chongqing Sulian Plastic and Beijing Enlight 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 Beijing Enlight Media are associated (or correlated) with Chongqing Sulian. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chongqing Sulian Plastic has no effect on the direction of Beijing Enlight i.e., Beijing Enlight and Chongqing Sulian go up and down completely randomly.
Pair Corralation between Beijing Enlight and Chongqing Sulian
Assuming the 90 days trading horizon Beijing Enlight is expected to generate 2.11 times less return on investment than Chongqing Sulian. But when comparing it to its historical volatility, Beijing Enlight Media is 1.83 times less risky than Chongqing Sulian. It trades about 0.06 of its potential returns per unit of risk. Chongqing Sulian Plastic is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 2,517 in Chongqing Sulian Plastic on October 31, 2024 and sell it today you would earn a total of 365.00 from holding Chongqing Sulian Plastic or generate 14.5% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Beijing Enlight Media vs. Chongqing Sulian Plastic
Performance |
Timeline |
Beijing Enlight Media |
Chongqing Sulian Plastic |
Beijing Enlight and Chongqing Sulian Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Beijing Enlight and Chongqing Sulian
The main advantage of trading using opposite Beijing Enlight and Chongqing Sulian positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Beijing Enlight position performs unexpectedly, Chongqing Sulian 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 Sulian will offset losses from the drop in Chongqing Sulian's long position.Beijing Enlight vs. China State Construction | ||
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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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