Correlation Between Jiaozuo Wanfang and Longjian Road
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By analyzing existing cross correlation between Jiaozuo Wanfang Aluminum and Longjian Road Bridge, you can compare the effects of market volatilities on Jiaozuo Wanfang and Longjian Road 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 Longjian Road. Check out your portfolio center. Please also check ongoing floating volatility patterns of Jiaozuo Wanfang and Longjian Road.
Diversification Opportunities for Jiaozuo Wanfang and Longjian Road
-0.23 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Jiaozuo and Longjian is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Jiaozuo Wanfang Aluminum and Longjian Road Bridge in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Longjian Road Bridge 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 Longjian Road. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Longjian Road Bridge has no effect on the direction of Jiaozuo Wanfang i.e., Jiaozuo Wanfang and Longjian Road go up and down completely randomly.
Pair Corralation between Jiaozuo Wanfang and Longjian Road
Assuming the 90 days trading horizon Jiaozuo Wanfang Aluminum is expected to generate 0.86 times more return on investment than Longjian Road. However, Jiaozuo Wanfang Aluminum is 1.17 times less risky than Longjian Road. It trades about 0.04 of its potential returns per unit of risk. Longjian Road Bridge is currently generating about 0.01 per unit of risk. If you would invest 544.00 in Jiaozuo Wanfang Aluminum on November 7, 2024 and sell it today you would earn a total of 172.00 from holding Jiaozuo Wanfang Aluminum or generate 31.62% 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. Longjian Road Bridge
Performance |
| Timeline |
| Jiaozuo Wanfang Aluminum |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Longjian Road Bridge |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Jiaozuo Wanfang and Longjian Road Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Jiaozuo Wanfang and Longjian Road
The main advantage of trading using opposite Jiaozuo Wanfang and Longjian Road positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Jiaozuo Wanfang position performs unexpectedly, Longjian Road 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 Longjian Road will offset losses from the drop in Longjian Road's long position.The idea behind Jiaozuo Wanfang Aluminum and Longjian Road Bridge 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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