Correlation Between Wanhua Chemical and Xinjiang Zhongtai
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By analyzing existing cross correlation between Wanhua Chemical Group and Xinjiang Zhongtai Chemical, you can compare the effects of market volatilities on Wanhua Chemical and Xinjiang Zhongtai 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 Wanhua Chemical with a short position of Xinjiang Zhongtai. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wanhua Chemical and Xinjiang Zhongtai.
Diversification Opportunities for Wanhua Chemical and Xinjiang Zhongtai
0.11 | Correlation Coefficient |
Average diversification
The 3 months correlation between Wanhua and Xinjiang is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Wanhua Chemical Group and Xinjiang Zhongtai Chemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xinjiang Zhongtai and Wanhua Chemical 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 Wanhua Chemical Group are associated (or correlated) with Xinjiang Zhongtai. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xinjiang Zhongtai has no effect on the direction of Wanhua Chemical i.e., Wanhua Chemical and Xinjiang Zhongtai go up and down completely randomly.
Pair Corralation between Wanhua Chemical and Xinjiang Zhongtai
Assuming the 90 days trading horizon Wanhua Chemical is expected to generate 4.17 times less return on investment than Xinjiang Zhongtai. In addition to that, Wanhua Chemical is 1.21 times more volatile than Xinjiang Zhongtai Chemical. It trades about 0.05 of its total potential returns per unit of risk. Xinjiang Zhongtai Chemical is currently generating about 0.26 per unit of volatility. If you would invest 342.00 in Xinjiang Zhongtai Chemical on September 12, 2024 and sell it today you would earn a total of 119.00 from holding Xinjiang Zhongtai Chemical or generate 34.8% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 98.28% |
Values | Daily Returns |
Wanhua Chemical Group vs. Xinjiang Zhongtai Chemical
Performance |
Timeline |
Wanhua Chemical Group |
Xinjiang Zhongtai |
Wanhua Chemical and Xinjiang Zhongtai Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Wanhua Chemical and Xinjiang Zhongtai
The main advantage of trading using opposite Wanhua Chemical and Xinjiang Zhongtai positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wanhua Chemical position performs unexpectedly, Xinjiang Zhongtai 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 Xinjiang Zhongtai will offset losses from the drop in Xinjiang Zhongtai's long position.Wanhua Chemical vs. Zijin Mining Group | Wanhua Chemical vs. Baoshan Iron Steel | Wanhua Chemical vs. Rongsheng Petrochemical Co | Wanhua Chemical vs. Hoshine Silicon Ind |
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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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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