Correlation Between Yunnan Copper and Tongding Interconnection
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By analyzing existing cross correlation between Yunnan Copper Co and Tongding Interconnection Information, you can compare the effects of market volatilities on Yunnan Copper and Tongding Interconnection 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 Yunnan Copper with a short position of Tongding Interconnection. Check out your portfolio center. Please also check ongoing floating volatility patterns of Yunnan Copper and Tongding Interconnection.
Diversification Opportunities for Yunnan Copper and Tongding Interconnection
-0.25 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Yunnan and Tongding is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Yunnan Copper Co and Tongding Interconnection Infor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tongding Interconnection and Yunnan Copper 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 Yunnan Copper Co are associated (or correlated) with Tongding Interconnection. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tongding Interconnection has no effect on the direction of Yunnan Copper i.e., Yunnan Copper and Tongding Interconnection go up and down completely randomly.
Pair Corralation between Yunnan Copper and Tongding Interconnection
Assuming the 90 days trading horizon Yunnan Copper is expected to generate 4.74 times less return on investment than Tongding Interconnection. But when comparing it to its historical volatility, Yunnan Copper Co is 3.18 times less risky than Tongding Interconnection. It trades about 0.13 of its potential returns per unit of risk. Tongding Interconnection Information is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest 401.00 in Tongding Interconnection Information on November 7, 2024 and sell it today you would earn a total of 55.00 from holding Tongding Interconnection Information or generate 13.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Yunnan Copper Co vs. Tongding Interconnection Infor
Performance |
| Timeline |
| Yunnan Copper |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Tongding Interconnection |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Weak
Yunnan Copper and Tongding Interconnection Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Yunnan Copper and Tongding Interconnection
The main advantage of trading using opposite Yunnan Copper and Tongding Interconnection positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Yunnan Copper position performs unexpectedly, Tongding Interconnection 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 Tongding Interconnection will offset losses from the drop in Tongding Interconnection's long position.The idea behind Yunnan Copper Co and Tongding Interconnection Information 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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