Correlation Between Shandong and China National
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By analyzing existing cross correlation between Shandong Hi Speed RoadBridge and China National Software, you can compare the effects of market volatilities on Shandong and China National 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 Shandong with a short position of China National. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shandong and China National.
Diversification Opportunities for Shandong and China National
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Shandong and China is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Shandong Hi Speed RoadBridge and China National Software in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China National Software and Shandong 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 Shandong Hi Speed RoadBridge are associated (or correlated) with China National. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China National Software has no effect on the direction of Shandong i.e., Shandong and China National go up and down completely randomly.
Pair Corralation between Shandong and China National
Assuming the 90 days trading horizon Shandong is expected to generate 2.46 times less return on investment than China National. But when comparing it to its historical volatility, Shandong Hi Speed RoadBridge is 1.65 times less risky than China National. It trades about 0.16 of its potential returns per unit of risk. China National Software is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest 3,084 in China National Software on September 3, 2024 and sell it today you would earn a total of 2,462 from holding China National Software or generate 79.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Shandong Hi Speed RoadBridge vs. China National Software
Performance |
| Timeline |
| Shandong Hi Speed |
| China National Software |
Shandong and China National Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shandong and China National
The main advantage of trading using opposite Shandong and China National positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shandong position performs unexpectedly, China National 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 China National will offset losses from the drop in China National's long position.| Shandong vs. Easyhome New Retail | Shandong vs. Ningbo Tip Rubber | Shandong vs. Ningxia Building Materials | Shandong vs. Super Dragon Engineering Plastics |
| China National vs. Shandong Hi Speed RoadBridge | China National vs. Huatian Hotel Group | China National vs. Jiangsu Broadcasting Cable | China National vs. Glodon Software Co |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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