Correlation Between Changchun Faway and Cangzhou Mingzhu
Specify exactly 2 symbols:
By analyzing existing cross correlation between Changchun Faway Automobile and Cangzhou Mingzhu Plastic, you can compare the effects of market volatilities on Changchun Faway and Cangzhou Mingzhu 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 Changchun Faway with a short position of Cangzhou Mingzhu. Check out your portfolio center. Please also check ongoing floating volatility patterns of Changchun Faway and Cangzhou Mingzhu.
Diversification Opportunities for Changchun Faway and Cangzhou Mingzhu
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Changchun and Cangzhou is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Changchun Faway Automobile and Cangzhou Mingzhu Plastic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cangzhou Mingzhu Plastic and Changchun Faway 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 Changchun Faway Automobile are associated (or correlated) with Cangzhou Mingzhu. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cangzhou Mingzhu Plastic has no effect on the direction of Changchun Faway i.e., Changchun Faway and Cangzhou Mingzhu go up and down completely randomly.
Pair Corralation between Changchun Faway and Cangzhou Mingzhu
Assuming the 90 days trading horizon Changchun Faway Automobile is expected to under-perform the Cangzhou Mingzhu. But the stock apears to be less risky and, when comparing its historical volatility, Changchun Faway Automobile is 1.93 times less risky than Cangzhou Mingzhu. The stock trades about -0.23 of its potential returns per unit of risk. The Cangzhou Mingzhu Plastic is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 362.00 in Cangzhou Mingzhu Plastic on September 25, 2024 and sell it today you would earn a total of 1.00 from holding Cangzhou Mingzhu Plastic or generate 0.28% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Strong |
Accuracy | 100.0% |
Values | Daily Returns |
Changchun Faway Automobile vs. Cangzhou Mingzhu Plastic
Performance |
Timeline |
Changchun Faway Auto |
Cangzhou Mingzhu Plastic |
Changchun Faway and Cangzhou Mingzhu Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Changchun Faway and Cangzhou Mingzhu
The main advantage of trading using opposite Changchun Faway and Cangzhou Mingzhu positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Changchun Faway position performs unexpectedly, Cangzhou Mingzhu 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 Cangzhou Mingzhu will offset losses from the drop in Cangzhou Mingzhu's long position.The idea behind Changchun Faway Automobile and Cangzhou Mingzhu Plastic 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.
Cangzhou Mingzhu vs. Zhejiang Kingland Pipeline | Cangzhou Mingzhu vs. Ningbo MedicalSystem Biotechnology | Cangzhou Mingzhu vs. Zoy Home Furnishing | Cangzhou Mingzhu vs. China Railway Construction |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
Other Complementary Tools
Idea Analyzer Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas | |
Performance Analysis Check effects of mean-variance optimization against your current asset allocation | |
Theme Ratings Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
Positions Ratings Determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
Portfolio Suggestion Get suggestions outside of your existing asset allocation including your own model portfolios |