Correlation Between Chongqing Brewery and Guangzhou Zhujiang
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By analyzing existing cross correlation between Chongqing Brewery Co and Guangzhou Zhujiang Brewery, you can compare the effects of market volatilities on Chongqing Brewery and Guangzhou Zhujiang 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 Brewery with a short position of Guangzhou Zhujiang. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chongqing Brewery and Guangzhou Zhujiang.
Diversification Opportunities for Chongqing Brewery and Guangzhou Zhujiang
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Chongqing and Guangzhou is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Chongqing Brewery Co and Guangzhou Zhujiang Brewery in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guangzhou Zhujiang and Chongqing Brewery 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 Brewery Co are associated (or correlated) with Guangzhou Zhujiang. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guangzhou Zhujiang has no effect on the direction of Chongqing Brewery i.e., Chongqing Brewery and Guangzhou Zhujiang go up and down completely randomly.
Pair Corralation between Chongqing Brewery and Guangzhou Zhujiang
Assuming the 90 days trading horizon Chongqing Brewery is expected to generate 2.05 times less return on investment than Guangzhou Zhujiang. In addition to that, Chongqing Brewery is 1.25 times more volatile than Guangzhou Zhujiang Brewery. It trades about 0.04 of its total potential returns per unit of risk. Guangzhou Zhujiang Brewery is currently generating about 0.09 per unit of volatility. If you would invest 885.00 in Guangzhou Zhujiang Brewery on September 26, 2024 and sell it today you would earn a total of 101.00 from holding Guangzhou Zhujiang Brewery or generate 11.41% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Chongqing Brewery Co vs. Guangzhou Zhujiang Brewery
Performance |
Timeline |
Chongqing Brewery |
Guangzhou Zhujiang |
Chongqing Brewery and Guangzhou Zhujiang Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Chongqing Brewery and Guangzhou Zhujiang
The main advantage of trading using opposite Chongqing Brewery and Guangzhou Zhujiang positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chongqing Brewery position performs unexpectedly, Guangzhou Zhujiang 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 Guangzhou Zhujiang will offset losses from the drop in Guangzhou Zhujiang's long position.Chongqing Brewery vs. BYD Co Ltd | Chongqing Brewery vs. China Mobile Limited | Chongqing Brewery vs. Agricultural Bank of | Chongqing Brewery vs. Industrial and Commercial |
Guangzhou Zhujiang vs. BYD Co Ltd | Guangzhou Zhujiang vs. China Mobile Limited | Guangzhou Zhujiang vs. Agricultural Bank of | Guangzhou Zhujiang vs. Industrial and Commercial |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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