Correlation Between Wuhan Yangtze and Shenzhen Changfang
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By analyzing existing cross correlation between Wuhan Yangtze Communication and Shenzhen Changfang Light, you can compare the effects of market volatilities on Wuhan Yangtze and Shenzhen Changfang 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 Wuhan Yangtze with a short position of Shenzhen Changfang. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wuhan Yangtze and Shenzhen Changfang.
Diversification Opportunities for Wuhan Yangtze and Shenzhen Changfang
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Wuhan and Shenzhen is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Wuhan Yangtze Communication and Shenzhen Changfang Light in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shenzhen Changfang Light and Wuhan Yangtze 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 Wuhan Yangtze Communication are associated (or correlated) with Shenzhen Changfang. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shenzhen Changfang Light has no effect on the direction of Wuhan Yangtze i.e., Wuhan Yangtze and Shenzhen Changfang go up and down completely randomly.
Pair Corralation between Wuhan Yangtze and Shenzhen Changfang
Assuming the 90 days trading horizon Wuhan Yangtze Communication is expected to generate 1.17 times more return on investment than Shenzhen Changfang. However, Wuhan Yangtze is 1.17 times more volatile than Shenzhen Changfang Light. It trades about 0.27 of its potential returns per unit of risk. Shenzhen Changfang Light is currently generating about 0.22 per unit of risk. If you would invest 1,480 in Wuhan Yangtze Communication on September 13, 2024 and sell it today you would earn a total of 1,491 from holding Wuhan Yangtze Communication or generate 100.74% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Strong |
Accuracy | 100.0% |
Values | Daily Returns |
Wuhan Yangtze Communication vs. Shenzhen Changfang Light
Performance |
Timeline |
Wuhan Yangtze Commun |
Shenzhen Changfang Light |
Wuhan Yangtze and Shenzhen Changfang Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Wuhan Yangtze and Shenzhen Changfang
The main advantage of trading using opposite Wuhan Yangtze and Shenzhen Changfang positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wuhan Yangtze position performs unexpectedly, Shenzhen Changfang 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 Shenzhen Changfang will offset losses from the drop in Shenzhen Changfang's long position.Wuhan Yangtze vs. Industrial and Commercial | Wuhan Yangtze vs. China Construction Bank | Wuhan Yangtze vs. Bank of China | Wuhan Yangtze vs. Agricultural Bank of |
Shenzhen Changfang vs. Kuangda Technology Group | Shenzhen Changfang vs. Xizi Clean Energy | Shenzhen Changfang vs. Beijing Kaiwen Education | Shenzhen Changfang vs. Shandong Publishing Media |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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