Correlation Between CIMC Vehicles and Changchun High

Can any of the company-specific risk be diversified away by investing in both CIMC Vehicles and Changchun High 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 CIMC Vehicles and Changchun High into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between CIMC Vehicles Co and Changchun High New, you can compare the effects of market volatilities on CIMC Vehicles and Changchun High 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 CIMC Vehicles with a short position of Changchun High. Check out your portfolio center. Please also check ongoing floating volatility patterns of CIMC Vehicles and Changchun High.

Diversification Opportunities for CIMC Vehicles and Changchun High

0.88

Correlation Coefficient

CIMC Vehicles  Changchun High

Very poor diversification

The 3 months correlation between CIMC and Changchun is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding CIMC Vehicles Co and Changchun High New in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Changchun High New and CIMC Vehicles 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 CIMC Vehicles Co are associated (or correlated) with Changchun High. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Changchun High New has no effect on the direction of CIMC Vehicles i.e., CIMC Vehicles and Changchun High go up and down completely randomly.

Pair Corralation between CIMC Vehicles and Changchun High

Assuming the 90 days trading horizon CIMC Vehicles Co is expected to generate 1.04 times more return on investment than Changchun High. However, CIMC Vehicles is 1.04 times more volatile than Changchun High New. It trades about -0.11 of its potential returns per unit of risk. Changchun High New is currently generating about -0.26 per unit of risk. If you would invest  985.00  in CIMC Vehicles Co on September 28, 2024 and sell it today you would lose (34.00) from holding CIMC Vehicles Co or give up 3.45% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	100.0%
Values	Daily Returns

CIMC Vehicles Co  vs.  Changchun High New

CIMC Vehicles

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CIMC Vehicles Co 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.

Changchun High New

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Changchun High New 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 CIMC Vehicles and Changchun High

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

The idea behind CIMC Vehicles Co and Changchun High New 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.