Correlation Between Shandong Xinhua and Xilinmen Furniture
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By analyzing existing cross correlation between Shandong Xinhua Pharmaceutical and Xilinmen Furniture Co, you can compare the effects of market volatilities on Shandong Xinhua and Xilinmen Furniture 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 Shandong Xinhua with a short position of Xilinmen Furniture. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shandong Xinhua and Xilinmen Furniture.
Diversification Opportunities for Shandong Xinhua and Xilinmen Furniture
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Shandong and Xilinmen is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Shandong Xinhua Pharmaceutical and Xilinmen Furniture Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xilinmen Furniture and Shandong Xinhua 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 Shandong Xinhua Pharmaceutical are associated (or correlated) with Xilinmen Furniture. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xilinmen Furniture has no effect on the direction of Shandong Xinhua i.e., Shandong Xinhua and Xilinmen Furniture go up and down completely randomly.
Pair Corralation between Shandong Xinhua and Xilinmen Furniture
Assuming the 90 days trading horizon Shandong Xinhua Pharmaceutical is expected to generate 0.89 times more return on investment than Xilinmen Furniture. However, Shandong Xinhua Pharmaceutical is 1.12 times less risky than Xilinmen Furniture. It trades about -0.09 of its potential returns per unit of risk. Xilinmen Furniture Co is currently generating about -0.11 per unit of risk. If you would invest 1,698 in Shandong Xinhua Pharmaceutical on September 12, 2024 and sell it today you would lose (71.00) from holding Shandong Xinhua Pharmaceutical or give up 4.18% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Shandong Xinhua Pharmaceutical vs. Xilinmen Furniture Co
Performance |
| Timeline |
| Shandong Xinhua Phar |
| Xilinmen Furniture |
Shandong Xinhua and Xilinmen Furniture Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shandong Xinhua and Xilinmen Furniture
The main advantage of trading using opposite Shandong Xinhua and Xilinmen Furniture positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shandong Xinhua position performs unexpectedly, Xilinmen Furniture 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 Xilinmen Furniture will offset losses from the drop in Xilinmen Furniture's long position.| Shandong Xinhua vs. Hubeiyichang Transportation Group | Shandong Xinhua vs. Xinjiang Beixin RoadBridge | Shandong Xinhua vs. Anhui Transport Consulting | Shandong Xinhua vs. Shanghai Rendu Biotechnology |
| Xilinmen Furniture vs. Lutian Machinery Co | Xilinmen Furniture vs. PetroChina Co Ltd | Xilinmen Furniture vs. Bank of China | Xilinmen Furniture vs. Gansu Jiu Steel |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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