Correlation Between Shantui Construction and Qijing Machinery
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By analyzing existing cross correlation between Shantui Construction Machinery and Qijing Machinery, you can compare the effects of market volatilities on Shantui Construction and Qijing Machinery 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 Shantui Construction with a short position of Qijing Machinery. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shantui Construction and Qijing Machinery.
Diversification Opportunities for Shantui Construction and Qijing Machinery
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Shantui and Qijing is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Shantui Construction Machinery and Qijing Machinery in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Qijing Machinery and Shantui Construction 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 Shantui Construction Machinery are associated (or correlated) with Qijing Machinery. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Qijing Machinery has no effect on the direction of Shantui Construction i.e., Shantui Construction and Qijing Machinery go up and down completely randomly.
Pair Corralation between Shantui Construction and Qijing Machinery
Assuming the 90 days trading horizon Shantui Construction Machinery is expected to generate 1.01 times more return on investment than Qijing Machinery. However, Shantui Construction is 1.01 times more volatile than Qijing Machinery. It trades about 0.34 of its potential returns per unit of risk. Qijing Machinery is currently generating about -0.11 per unit of risk. If you would invest 839.00 in Shantui Construction Machinery on August 28, 2024 and sell it today you would earn a total of 216.00 from holding Shantui Construction Machinery or generate 25.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Shantui Construction Machinery vs. Qijing Machinery
Performance |
| Timeline |
| Shantui Construction |
| Qijing Machinery |
Shantui Construction and Qijing Machinery Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shantui Construction and Qijing Machinery
The main advantage of trading using opposite Shantui Construction and Qijing Machinery positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shantui Construction position performs unexpectedly, Qijing Machinery 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 Qijing Machinery will offset losses from the drop in Qijing Machinery's long position.The idea behind Shantui Construction Machinery and Qijing Machinery 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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