Correlation Between Tongling Nonferrous and Jiangsu Pacific
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By analyzing existing cross correlation between Tongling Nonferrous Metals and Jiangsu Pacific Quartz, you can compare the effects of market volatilities on Tongling Nonferrous and Jiangsu Pacific 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 Tongling Nonferrous with a short position of Jiangsu Pacific. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tongling Nonferrous and Jiangsu Pacific.
Diversification Opportunities for Tongling Nonferrous and Jiangsu Pacific
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Tongling and Jiangsu is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Tongling Nonferrous Metals and Jiangsu Pacific Quartz in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jiangsu Pacific Quartz and Tongling Nonferrous 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 Tongling Nonferrous Metals are associated (or correlated) with Jiangsu Pacific. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jiangsu Pacific Quartz has no effect on the direction of Tongling Nonferrous i.e., Tongling Nonferrous and Jiangsu Pacific go up and down completely randomly.
Pair Corralation between Tongling Nonferrous and Jiangsu Pacific
Assuming the 90 days trading horizon Tongling Nonferrous Metals is expected to generate 0.55 times more return on investment than Jiangsu Pacific. However, Tongling Nonferrous Metals is 1.83 times less risky than Jiangsu Pacific. It trades about -0.04 of its potential returns per unit of risk. Jiangsu Pacific Quartz is currently generating about -0.2 per unit of risk. If you would invest 331.00 in Tongling Nonferrous Metals on October 28, 2024 and sell it today you would lose (4.00) from holding Tongling Nonferrous Metals or give up 1.21% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Tongling Nonferrous Metals vs. Jiangsu Pacific Quartz
Performance |
| Timeline |
| Tongling Nonferrous |
| Jiangsu Pacific Quartz |
Tongling Nonferrous and Jiangsu Pacific Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tongling Nonferrous and Jiangsu Pacific
The main advantage of trading using opposite Tongling Nonferrous and Jiangsu Pacific positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tongling Nonferrous position performs unexpectedly, Jiangsu Pacific 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 Jiangsu Pacific will offset losses from the drop in Jiangsu Pacific's long position.The idea behind Tongling Nonferrous Metals and Jiangsu Pacific Quartz 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.
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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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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