Correlation Between Shenzhen SDG and Western Metal
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By analyzing existing cross correlation between Shenzhen SDG Information and Western Metal Materials, you can compare the effects of market volatilities on Shenzhen SDG and Western Metal 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 Shenzhen SDG with a short position of Western Metal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shenzhen SDG and Western Metal.
Diversification Opportunities for Shenzhen SDG and Western Metal
-0.13 | Correlation Coefficient |
Good diversification
The 3 months correlation between Shenzhen and Western is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Shenzhen SDG Information and Western Metal Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Western Metal Materials and Shenzhen SDG 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 Shenzhen SDG Information are associated (or correlated) with Western Metal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Western Metal Materials has no effect on the direction of Shenzhen SDG i.e., Shenzhen SDG and Western Metal go up and down completely randomly.
Pair Corralation between Shenzhen SDG and Western Metal
Assuming the 90 days trading horizon Shenzhen SDG Information is expected to generate 0.67 times more return on investment than Western Metal. However, Shenzhen SDG Information is 1.49 times less risky than Western Metal. It trades about 0.2 of its potential returns per unit of risk. Western Metal Materials is currently generating about 0.12 per unit of risk. If you would invest 522.00 in Shenzhen SDG Information on November 7, 2024 and sell it today you would earn a total of 40.00 from holding Shenzhen SDG Information or generate 7.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Shenzhen SDG Information vs. Western Metal Materials
Performance |
| Timeline |
| Shenzhen SDG Information |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Weak
| Western Metal Materials |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Weak
Shenzhen SDG and Western Metal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shenzhen SDG and Western Metal
The main advantage of trading using opposite Shenzhen SDG and Western Metal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shenzhen SDG position performs unexpectedly, Western Metal 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 Western Metal will offset losses from the drop in Western Metal's long position.The idea behind Shenzhen SDG Information and Western Metal Materials 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.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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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