Correlation Between Shenzhen SDG and Xinjiang Communications
Specify exactly 2 symbols:
By analyzing existing cross correlation between Shenzhen SDG Information and Xinjiang Communications Construction, you can compare the effects of market volatilities on Shenzhen SDG and Xinjiang Communications 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 Xinjiang Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shenzhen SDG and Xinjiang Communications.
Diversification Opportunities for Shenzhen SDG and Xinjiang Communications
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Shenzhen and Xinjiang is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Shenzhen SDG Information and Xinjiang Communications Constr in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xinjiang Communications 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 Xinjiang Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xinjiang Communications has no effect on the direction of Shenzhen SDG i.e., Shenzhen SDG and Xinjiang Communications go up and down completely randomly.
Pair Corralation between Shenzhen SDG and Xinjiang Communications
Assuming the 90 days trading horizon Shenzhen SDG Information is expected to generate 1.3 times more return on investment than Xinjiang Communications. However, Shenzhen SDG is 1.3 times more volatile than Xinjiang Communications Construction. It trades about 0.22 of its potential returns per unit of risk. Xinjiang Communications Construction is currently generating about 0.15 per unit of risk. If you would invest 529.00 in Shenzhen SDG Information on November 8, 2024 and sell it today you would earn a total of 44.00 from holding Shenzhen SDG Information or generate 8.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Shenzhen SDG Information vs. Xinjiang Communications Constr
Performance |
| Timeline |
| Shenzhen SDG Information |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Xinjiang Communications |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Shenzhen SDG and Xinjiang Communications Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shenzhen SDG and Xinjiang Communications
The main advantage of trading using opposite Shenzhen SDG and Xinjiang Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shenzhen SDG position performs unexpectedly, Xinjiang Communications 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 Xinjiang Communications will offset losses from the drop in Xinjiang Communications' long position.The idea behind Shenzhen SDG Information and Xinjiang Communications Construction 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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