Correlation Between Zhongshan Broad and WuXi Xinje
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By analyzing existing cross correlation between Zhongshan Broad Ocean Motor and WuXi Xinje Electric, you can compare the effects of market volatilities on Zhongshan Broad and WuXi Xinje 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 Zhongshan Broad with a short position of WuXi Xinje. Check out your portfolio center. Please also check ongoing floating volatility patterns of Zhongshan Broad and WuXi Xinje.
Diversification Opportunities for Zhongshan Broad and WuXi Xinje
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Zhongshan and WuXi is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Zhongshan Broad Ocean Motor and WuXi Xinje Electric in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WuXi Xinje Electric and Zhongshan Broad 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 Zhongshan Broad Ocean Motor are associated (or correlated) with WuXi Xinje. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WuXi Xinje Electric has no effect on the direction of Zhongshan Broad i.e., Zhongshan Broad and WuXi Xinje go up and down completely randomly.
Pair Corralation between Zhongshan Broad and WuXi Xinje
Assuming the 90 days trading horizon Zhongshan Broad is expected to generate 1.94 times less return on investment than WuXi Xinje. But when comparing it to its historical volatility, Zhongshan Broad Ocean Motor is 1.41 times less risky than WuXi Xinje. It trades about 0.09 of its potential returns per unit of risk. WuXi Xinje Electric is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 2,913 in WuXi Xinje Electric on September 24, 2024 and sell it today you would earn a total of 1,277 from holding WuXi Xinje Electric or generate 43.84% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Strong |
Accuracy | 100.0% |
Values | Daily Returns |
Zhongshan Broad Ocean Motor vs. WuXi Xinje Electric
Performance |
Timeline |
Zhongshan Broad Ocean |
WuXi Xinje Electric |
Zhongshan Broad and WuXi Xinje Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Zhongshan Broad and WuXi Xinje
The main advantage of trading using opposite Zhongshan Broad and WuXi Xinje positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Zhongshan Broad position performs unexpectedly, WuXi Xinje 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 WuXi Xinje will offset losses from the drop in WuXi Xinje's long position.Zhongshan Broad vs. V V Food | Zhongshan Broad vs. Anhui Jianghuai Automobile | Zhongshan Broad vs. HaiXin Foods Co | Zhongshan Broad vs. Great Sun Foods Co |
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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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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