Correlation Between Huadong Medicine and Shanghai Jin
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By analyzing existing cross correlation between Huadong Medicine Co and Shanghai Jin Jiang, you can compare the effects of market volatilities on Huadong Medicine and Shanghai Jin 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 Huadong Medicine with a short position of Shanghai Jin. Check out your portfolio center. Please also check ongoing floating volatility patterns of Huadong Medicine and Shanghai Jin.
Diversification Opportunities for Huadong Medicine and Shanghai Jin
0.35 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Huadong and Shanghai is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Huadong Medicine Co and Shanghai Jin Jiang in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shanghai Jin Jiang and Huadong Medicine 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 Huadong Medicine Co are associated (or correlated) with Shanghai Jin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shanghai Jin Jiang has no effect on the direction of Huadong Medicine i.e., Huadong Medicine and Shanghai Jin go up and down completely randomly.
Pair Corralation between Huadong Medicine and Shanghai Jin
Assuming the 90 days trading horizon Huadong Medicine Co is expected to generate 1.83 times more return on investment than Shanghai Jin. However, Huadong Medicine is 1.83 times more volatile than Shanghai Jin Jiang. It trades about -0.02 of its potential returns per unit of risk. Shanghai Jin Jiang is currently generating about -0.03 per unit of risk. If you would invest 3,381 in Huadong Medicine Co on October 14, 2024 and sell it today you would lose (118.00) from holding Huadong Medicine Co or give up 3.49% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Huadong Medicine Co vs. Shanghai Jin Jiang
Performance |
| Timeline |
| Huadong Medicine |
| Shanghai Jin Jiang |
Huadong Medicine and Shanghai Jin Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Huadong Medicine and Shanghai Jin
The main advantage of trading using opposite Huadong Medicine and Shanghai Jin positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Huadong Medicine position performs unexpectedly, Shanghai Jin 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 Shanghai Jin will offset losses from the drop in Shanghai Jin's long position.The idea behind Huadong Medicine Co and Shanghai Jin Jiang 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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