Correlation Between Caihong Display and Beijing Wantai
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By analyzing existing cross correlation between Caihong Display Devices and Beijing Wantai Biological, you can compare the effects of market volatilities on Caihong Display and Beijing Wantai 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 Caihong Display with a short position of Beijing Wantai. Check out your portfolio center. Please also check ongoing floating volatility patterns of Caihong Display and Beijing Wantai.
Diversification Opportunities for Caihong Display and Beijing Wantai
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Caihong and Beijing is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Caihong Display Devices and Beijing Wantai Biological in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Beijing Wantai Biological and Caihong Display 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 Caihong Display Devices are associated (or correlated) with Beijing Wantai. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Beijing Wantai Biological has no effect on the direction of Caihong Display i.e., Caihong Display and Beijing Wantai go up and down completely randomly.
Pair Corralation between Caihong Display and Beijing Wantai
Assuming the 90 days trading horizon Caihong Display Devices is expected to generate 1.26 times more return on investment than Beijing Wantai. However, Caihong Display is 1.26 times more volatile than Beijing Wantai Biological. It trades about 0.15 of its potential returns per unit of risk. Beijing Wantai Biological is currently generating about 0.09 per unit of risk. If you would invest 603.00 in Caihong Display Devices on September 13, 2024 and sell it today you would earn a total of 163.00 from holding Caihong Display Devices or generate 27.03% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Caihong Display Devices vs. Beijing Wantai Biological
Performance |
Timeline |
Caihong Display Devices |
Beijing Wantai Biological |
Caihong Display and Beijing Wantai Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Caihong Display and Beijing Wantai
The main advantage of trading using opposite Caihong Display and Beijing Wantai positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Caihong Display position performs unexpectedly, Beijing Wantai 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 Beijing Wantai will offset losses from the drop in Beijing Wantai's long position.Caihong Display vs. Industrial and Commercial | Caihong Display vs. Agricultural Bank of | Caihong Display vs. China Construction Bank | Caihong Display vs. Bank of China |
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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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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