Correlation Between Shandong and Ming Yang
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By analyzing existing cross correlation between Shandong Hi Speed RoadBridge and Ming Yang Smart, you can compare the effects of market volatilities on Shandong and Ming Yang 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 Ming Yang. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shandong and Ming Yang.
Diversification Opportunities for Shandong and Ming Yang
Almost no diversification
The 3 months correlation between Shandong and Ming is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Shandong Hi Speed RoadBridge and Ming Yang Smart in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ming Yang Smart 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 Ming Yang. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ming Yang Smart has no effect on the direction of Shandong i.e., Shandong and Ming Yang go up and down completely randomly.
Pair Corralation between Shandong and Ming Yang
Assuming the 90 days trading horizon Shandong Hi Speed RoadBridge is expected to under-perform the Ming Yang. But the stock apears to be less risky and, when comparing its historical volatility, Shandong Hi Speed RoadBridge is 1.73 times less risky than Ming Yang. The stock trades about -0.03 of its potential returns per unit of risk. The Ming Yang Smart is currently generating about 0.26 of returns per unit of risk over similar time horizon. If you would invest 1,204 in Ming Yang Smart on September 1, 2024 and sell it today you would earn a total of 216.00 from holding Ming Yang Smart or generate 17.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Shandong Hi Speed RoadBridge vs. Ming Yang Smart
Performance |
| Timeline |
| Shandong Hi Speed |
| Ming Yang Smart |
Shandong and Ming Yang Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shandong and Ming Yang
The main advantage of trading using opposite Shandong and Ming Yang positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shandong position performs unexpectedly, Ming Yang 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 Ming Yang will offset losses from the drop in Ming Yang's long position.The idea behind Shandong Hi Speed RoadBridge and Ming Yang Smart 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.| Ming Yang vs. Xilong Chemical Co | Ming Yang vs. Wuxi Chemical Equipment | Ming Yang vs. Shenyang Chemical Industry | Ming Yang vs. Tianshui Huatian Technology |
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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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