Correlation Between Shenyang Huitian and Jinlong Machinery
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By analyzing existing cross correlation between Shenyang Huitian Thermal and Jinlong Machinery Electronic, you can compare the effects of market volatilities on Shenyang Huitian and Jinlong 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 Shenyang Huitian with a short position of Jinlong Machinery. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shenyang Huitian and Jinlong Machinery.
Diversification Opportunities for Shenyang Huitian and Jinlong Machinery
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Shenyang and Jinlong is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Shenyang Huitian Thermal and Jinlong Machinery Electronic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jinlong Machinery and Shenyang Huitian 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 Shenyang Huitian Thermal are associated (or correlated) with Jinlong Machinery. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jinlong Machinery has no effect on the direction of Shenyang Huitian i.e., Shenyang Huitian and Jinlong Machinery go up and down completely randomly.
Pair Corralation between Shenyang Huitian and Jinlong Machinery
Assuming the 90 days trading horizon Shenyang Huitian Thermal is expected to under-perform the Jinlong Machinery. But the stock apears to be less risky and, when comparing its historical volatility, Shenyang Huitian Thermal is 1.2 times less risky than Jinlong Machinery. The stock trades about -0.38 of its potential returns per unit of risk. The Jinlong Machinery Electronic is currently generating about -0.2 of returns per unit of risk over similar time horizon. If you would invest 533.00 in Jinlong Machinery Electronic on October 19, 2024 and sell it today you would lose (84.00) from holding Jinlong Machinery Electronic or give up 15.76% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Shenyang Huitian Thermal vs. Jinlong Machinery Electronic
Performance |
| Timeline |
| Shenyang Huitian Thermal |
| Jinlong Machinery |
Shenyang Huitian and Jinlong Machinery Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shenyang Huitian and Jinlong Machinery
The main advantage of trading using opposite Shenyang Huitian and Jinlong Machinery positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shenyang Huitian position performs unexpectedly, Jinlong 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 Jinlong Machinery will offset losses from the drop in Jinlong Machinery's long position.The idea behind Shenyang Huitian Thermal and Jinlong Machinery Electronic 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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