Correlation Between Nanhua Bio and Shanghai Bailian
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By analyzing existing cross correlation between Nanhua Bio Medicine and Shanghai Bailian Group, you can compare the effects of market volatilities on Nanhua Bio and Shanghai Bailian 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 Nanhua Bio with a short position of Shanghai Bailian. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nanhua Bio and Shanghai Bailian.
Diversification Opportunities for Nanhua Bio and Shanghai Bailian
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Nanhua and Shanghai is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Nanhua Bio Medicine and Shanghai Bailian Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shanghai Bailian and Nanhua Bio 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 Nanhua Bio Medicine are associated (or correlated) with Shanghai Bailian. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shanghai Bailian has no effect on the direction of Nanhua Bio i.e., Nanhua Bio and Shanghai Bailian go up and down completely randomly.
Pair Corralation between Nanhua Bio and Shanghai Bailian
Assuming the 90 days trading horizon Nanhua Bio is expected to generate 1.31 times less return on investment than Shanghai Bailian. In addition to that, Nanhua Bio is 1.22 times more volatile than Shanghai Bailian Group. It trades about 0.14 of its total potential returns per unit of risk. Shanghai Bailian Group is currently generating about 0.23 per unit of volatility. If you would invest 52.00 in Shanghai Bailian Group on August 30, 2024 and sell it today you would earn a total of 16.00 from holding Shanghai Bailian Group or generate 30.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nanhua Bio Medicine vs. Shanghai Bailian Group
Performance |
| Timeline |
| Nanhua Bio Medicine |
| Shanghai Bailian |
Nanhua Bio and Shanghai Bailian Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nanhua Bio and Shanghai Bailian
The main advantage of trading using opposite Nanhua Bio and Shanghai Bailian positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nanhua Bio position performs unexpectedly, Shanghai Bailian 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 Shanghai Bailian will offset losses from the drop in Shanghai Bailian's long position.| Nanhua Bio vs. Youyou Foods Co | Nanhua Bio vs. Industrial Bank Co | Nanhua Bio vs. Juewei Food Co | Nanhua Bio vs. HeNan Splendor Science |
| Shanghai Bailian vs. Jinhe Biotechnology Co | Shanghai Bailian vs. Changchun BCHT Biotechnology | Shanghai Bailian vs. Bomesc Offshore Engineering | Shanghai Bailian vs. Healthcare 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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