Correlation Between Jiaozuo Wanfang and Shenzhen Glory
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By analyzing existing cross correlation between Jiaozuo Wanfang Aluminum and Shenzhen Glory Medical, you can compare the effects of market volatilities on Jiaozuo Wanfang and Shenzhen Glory 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 Jiaozuo Wanfang with a short position of Shenzhen Glory. Check out your portfolio center. Please also check ongoing floating volatility patterns of Jiaozuo Wanfang and Shenzhen Glory.
Diversification Opportunities for Jiaozuo Wanfang and Shenzhen Glory
-0.11 | Correlation Coefficient |
Good diversification
The 3 months correlation between Jiaozuo and Shenzhen is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Jiaozuo Wanfang Aluminum and Shenzhen Glory Medical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shenzhen Glory Medical and Jiaozuo Wanfang 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 Jiaozuo Wanfang Aluminum are associated (or correlated) with Shenzhen Glory. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shenzhen Glory Medical has no effect on the direction of Jiaozuo Wanfang i.e., Jiaozuo Wanfang and Shenzhen Glory go up and down completely randomly.
Pair Corralation between Jiaozuo Wanfang and Shenzhen Glory
Assuming the 90 days trading horizon Jiaozuo Wanfang is expected to generate 1.75 times less return on investment than Shenzhen Glory. But when comparing it to its historical volatility, Jiaozuo Wanfang Aluminum is 1.23 times less risky than Shenzhen Glory. It trades about 0.14 of its potential returns per unit of risk. Shenzhen Glory Medical is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest 294.00 in Shenzhen Glory Medical on November 8, 2024 and sell it today you would earn a total of 22.00 from holding Shenzhen Glory Medical or generate 7.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Jiaozuo Wanfang Aluminum vs. Shenzhen Glory Medical
Performance |
| Timeline |
| Jiaozuo Wanfang Aluminum |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Shenzhen Glory Medical |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Jiaozuo Wanfang and Shenzhen Glory Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Jiaozuo Wanfang and Shenzhen Glory
The main advantage of trading using opposite Jiaozuo Wanfang and Shenzhen Glory positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Jiaozuo Wanfang position performs unexpectedly, Shenzhen Glory 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 Shenzhen Glory will offset losses from the drop in Shenzhen Glory's long position.The idea behind Jiaozuo Wanfang Aluminum and Shenzhen Glory Medical 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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