Correlation Between Shantui Construction and Allied Machinery
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By analyzing existing cross correlation between Shantui Construction Machinery and Allied Machinery Co, you can compare the effects of market volatilities on Shantui Construction and Allied 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 Allied Machinery. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shantui Construction and Allied Machinery.
Diversification Opportunities for Shantui Construction and Allied Machinery
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Shantui and Allied is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Shantui Construction Machinery and Allied Machinery Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Allied 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 Allied Machinery. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Allied Machinery has no effect on the direction of Shantui Construction i.e., Shantui Construction and Allied Machinery go up and down completely randomly.
Pair Corralation between Shantui Construction and Allied Machinery
Assuming the 90 days trading horizon Shantui Construction Machinery is expected to under-perform the Allied Machinery. But the stock apears to be less risky and, when comparing its historical volatility, Shantui Construction Machinery is 1.51 times less risky than Allied Machinery. The stock trades about -0.32 of its potential returns per unit of risk. The Allied Machinery Co is currently generating about -0.09 of returns per unit of risk over similar time horizon. If you would invest 1,685 in Allied Machinery Co on September 28, 2024 and sell it today you would lose (98.00) from holding Allied Machinery Co or give up 5.82% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Shantui Construction Machinery vs. Allied Machinery Co
Performance |
| Timeline |
| Shantui Construction |
| Allied Machinery |
Shantui Construction and Allied Machinery Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shantui Construction and Allied Machinery
The main advantage of trading using opposite Shantui Construction and Allied Machinery positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shantui Construction position performs unexpectedly, Allied 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 Allied Machinery will offset losses from the drop in Allied Machinery's long position.| Shantui Construction vs. ZYF Lopsking Aluminum | Shantui Construction vs. Western Metal Materials | Shantui Construction vs. Healthcare Co | Shantui Construction vs. Anhui Transport Consulting |
| Allied Machinery vs. Bank of China | Allied Machinery vs. Kweichow Moutai Co | Allied Machinery vs. PetroChina Co Ltd | Allied Machinery vs. Bank of Communications |
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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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