Correlation Between Zhongshan Public and Hunan Investment
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By analyzing existing cross correlation between Zhongshan Public Utilities and Hunan Investment Group, you can compare the effects of market volatilities on Zhongshan Public and Hunan Investment 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 Zhongshan Public with a short position of Hunan Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Zhongshan Public and Hunan Investment.
Diversification Opportunities for Zhongshan Public and Hunan Investment
0.3 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Zhongshan and Hunan is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Zhongshan Public Utilities and Hunan Investment Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hunan Investment and Zhongshan Public 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 Zhongshan Public Utilities are associated (or correlated) with Hunan Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hunan Investment has no effect on the direction of Zhongshan Public i.e., Zhongshan Public and Hunan Investment go up and down completely randomly.
Pair Corralation between Zhongshan Public and Hunan Investment
Assuming the 90 days trading horizon Zhongshan Public is expected to generate 2.6 times less return on investment than Hunan Investment. But when comparing it to its historical volatility, Zhongshan Public Utilities is 1.28 times less risky than Hunan Investment. It trades about 0.14 of its potential returns per unit of risk. Hunan Investment Group is currently generating about 0.29 of returns per unit of risk over similar time horizon. If you would invest 488.00 in Hunan Investment Group on November 7, 2024 and sell it today you would earn a total of 37.00 from holding Hunan Investment Group or generate 7.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Zhongshan Public Utilities vs. Hunan Investment Group
Performance |
| Timeline |
| Zhongshan Public Uti |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Hunan Investment |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Weak
Zhongshan Public and Hunan Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Zhongshan Public and Hunan Investment
The main advantage of trading using opposite Zhongshan Public and Hunan Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Zhongshan Public position performs unexpectedly, Hunan Investment 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 Hunan Investment will offset losses from the drop in Hunan Investment's long position.The idea behind Zhongshan Public Utilities and Hunan Investment Group 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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