Correlation Between Chengdu Kanghua and ZTE Corp
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By analyzing existing cross correlation between Chengdu Kanghua Biological and ZTE Corp, you can compare the effects of market volatilities on Chengdu Kanghua and ZTE Corp 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 Chengdu Kanghua with a short position of ZTE Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chengdu Kanghua and ZTE Corp.
Diversification Opportunities for Chengdu Kanghua and ZTE Corp
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Chengdu and ZTE is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Chengdu Kanghua Biological and ZTE Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ZTE Corp and Chengdu Kanghua 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 Chengdu Kanghua Biological are associated (or correlated) with ZTE Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ZTE Corp has no effect on the direction of Chengdu Kanghua i.e., Chengdu Kanghua and ZTE Corp go up and down completely randomly.
Pair Corralation between Chengdu Kanghua and ZTE Corp
Assuming the 90 days trading horizon Chengdu Kanghua is expected to generate 2.21 times less return on investment than ZTE Corp. In addition to that, Chengdu Kanghua is 1.28 times more volatile than ZTE Corp. It trades about 0.04 of its total potential returns per unit of risk. ZTE Corp is currently generating about 0.11 per unit of volatility. If you would invest 2,677 in ZTE Corp on September 24, 2024 and sell it today you would earn a total of 1,061 from holding ZTE Corp or generate 39.63% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Chengdu Kanghua Biological vs. ZTE Corp
Performance |
Timeline |
Chengdu Kanghua Biol |
ZTE Corp |
Chengdu Kanghua and ZTE Corp Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Chengdu Kanghua and ZTE Corp
The main advantage of trading using opposite Chengdu Kanghua and ZTE Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chengdu Kanghua position performs unexpectedly, ZTE Corp 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 ZTE Corp will offset losses from the drop in ZTE Corp's long position.Chengdu Kanghua vs. Industrial and Commercial | Chengdu Kanghua vs. Agricultural Bank of | Chengdu Kanghua vs. China Construction Bank | Chengdu Kanghua vs. Bank of China |
ZTE Corp vs. Industrial and Commercial | ZTE Corp vs. Agricultural Bank of | ZTE Corp vs. China Construction Bank | ZTE Corp vs. Bank of China |
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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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