Correlation Between China Securities and Guangdong Tianhe
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By analyzing existing cross correlation between China Securities 800 and Guangdong Tianhe Agricultural, you can compare the effects of market volatilities on China Securities and Guangdong Tianhe 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 China Securities with a short position of Guangdong Tianhe. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Securities and Guangdong Tianhe.
Diversification Opportunities for China Securities and Guangdong Tianhe
0.49 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between China and Guangdong is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding China Securities 800 and Guangdong Tianhe Agricultural in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guangdong Tianhe Agr and China Securities 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 China Securities 800 are associated (or correlated) with Guangdong Tianhe. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guangdong Tianhe Agr has no effect on the direction of China Securities i.e., China Securities and Guangdong Tianhe go up and down completely randomly.
Pair Corralation between China Securities and Guangdong Tianhe
Assuming the 90 days trading horizon China Securities 800 is expected to generate 0.45 times more return on investment than Guangdong Tianhe. However, China Securities 800 is 2.22 times less risky than Guangdong Tianhe. It trades about -0.01 of its potential returns per unit of risk. Guangdong Tianhe Agricultural is currently generating about -0.02 per unit of risk. If you would invest 445,973 in China Securities 800 on November 7, 2024 and sell it today you would lose (34,869) from holding China Securities 800 or give up 7.82% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.79% |
| Values | Daily Returns |
China Securities 800 vs. Guangdong Tianhe Agricultural
Performance |
| Timeline |
China Securities and Guangdong Tianhe Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Securities and Guangdong Tianhe
The main advantage of trading using opposite China Securities and Guangdong Tianhe positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Securities position performs unexpectedly, Guangdong Tianhe 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 Guangdong Tianhe will offset losses from the drop in Guangdong Tianhe's long position.The idea behind China Securities 800 and Guangdong Tianhe Agricultural 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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