Correlation Between Contemporary Amperex and Western Superconducting

Can any of the company-specific risk be diversified away by investing in both Contemporary Amperex and Western Superconducting 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 Contemporary Amperex and Western Superconducting into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Contemporary Amperex Technology and Western Superconducting Tech, you can compare the effects of market volatilities on Contemporary Amperex and Western Superconducting 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 Contemporary Amperex with a short position of Western Superconducting. Check out your portfolio center. Please also check ongoing floating volatility patterns of Contemporary Amperex and Western Superconducting.

Diversification Opportunities for Contemporary Amperex and Western Superconducting

0.0

Correlation Coefficient

Contemporary Amperex  Western Superconducting

Pay attention - limited upside

The 3 months correlation between Contemporary and Western is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Contemporary Amperex Technolog and Western Superconducting Tech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Western Superconducting and Contemporary Amperex 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 Contemporary Amperex Technology are associated (or correlated) with Western Superconducting. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Western Superconducting has no effect on the direction of Contemporary Amperex i.e., Contemporary Amperex and Western Superconducting go up and down completely randomly.

Pair Corralation between Contemporary Amperex and Western Superconducting

Assuming the 90 days trading horizon Contemporary Amperex Technology is expected to under-perform the Western Superconducting. But the stock apears to be less risky and, when comparing its historical volatility, Contemporary Amperex Technology is 1.06 times less risky than Western Superconducting. The stock trades about -0.12 of its potential returns per unit of risk. The Western Superconducting Tech is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest  4,383  in Western Superconducting Tech on October 21, 2024 and sell it today you would lose (38.00) from holding Western Superconducting Tech or give up 0.87% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Contemporary Amperex Technolog  vs.  Western Superconducting Tech

Contemporary Amperex

Risk-Adjusted Performance

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Very Weak

Over the last 90 days Contemporary Amperex Technology has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Contemporary Amperex is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Western Superconducting

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Western Superconducting Tech has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Contemporary Amperex and Western Superconducting

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

The idea behind Contemporary Amperex Technology and Western Superconducting Tech 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.