Correlation Between Guangdong Fenghua and Shenzhen Kexin
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By analyzing existing cross correlation between Guangdong Fenghua Advanced and Shenzhen Kexin Communication, you can compare the effects of market volatilities on Guangdong Fenghua and Shenzhen Kexin 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 Guangdong Fenghua with a short position of Shenzhen Kexin. Check out your portfolio center. Please also check ongoing floating volatility patterns of Guangdong Fenghua and Shenzhen Kexin.
Diversification Opportunities for Guangdong Fenghua and Shenzhen Kexin
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Guangdong and Shenzhen is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Guangdong Fenghua Advanced and Shenzhen Kexin Communication in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shenzhen Kexin Commu and Guangdong Fenghua 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 Guangdong Fenghua Advanced are associated (or correlated) with Shenzhen Kexin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shenzhen Kexin Commu has no effect on the direction of Guangdong Fenghua i.e., Guangdong Fenghua and Shenzhen Kexin go up and down completely randomly.
Pair Corralation between Guangdong Fenghua and Shenzhen Kexin
Assuming the 90 days trading horizon Guangdong Fenghua Advanced is expected to generate 0.81 times more return on investment than Shenzhen Kexin. However, Guangdong Fenghua Advanced is 1.24 times less risky than Shenzhen Kexin. It trades about -0.04 of its potential returns per unit of risk. Shenzhen Kexin Communication is currently generating about -0.24 per unit of risk. If you would invest 1,582 in Guangdong Fenghua Advanced on August 31, 2024 and sell it today you would lose (47.00) from holding Guangdong Fenghua Advanced or give up 2.97% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 95.65% |
| Values | Daily Returns |
Guangdong Fenghua Advanced vs. Shenzhen Kexin Communication
Performance |
| Timeline |
| Guangdong Fenghua |
| Shenzhen Kexin Commu |
Guangdong Fenghua and Shenzhen Kexin Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Guangdong Fenghua and Shenzhen Kexin
The main advantage of trading using opposite Guangdong Fenghua and Shenzhen Kexin positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Guangdong Fenghua position performs unexpectedly, Shenzhen Kexin 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 Kexin will offset losses from the drop in Shenzhen Kexin's long position.The idea behind Guangdong Fenghua Advanced and Shenzhen Kexin Communication 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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