Correlation Between Advanced Technology and XCMG Construction
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By analyzing existing cross correlation between Advanced Technology Materials and XCMG Construction Machinery, you can compare the effects of market volatilities on Advanced Technology and XCMG Construction 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 Advanced Technology with a short position of XCMG Construction. Check out your portfolio center. Please also check ongoing floating volatility patterns of Advanced Technology and XCMG Construction.
Diversification Opportunities for Advanced Technology and XCMG Construction
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Advanced and XCMG is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Advanced Technology Materials and XCMG Construction Machinery in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on XCMG Construction and Advanced Technology 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 Advanced Technology Materials are associated (or correlated) with XCMG Construction. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of XCMG Construction has no effect on the direction of Advanced Technology i.e., Advanced Technology and XCMG Construction go up and down completely randomly.
Pair Corralation between Advanced Technology and XCMG Construction
Assuming the 90 days trading horizon Advanced Technology Materials is expected to generate 1.8 times more return on investment than XCMG Construction. However, Advanced Technology is 1.8 times more volatile than XCMG Construction Machinery. It trades about 0.19 of its potential returns per unit of risk. XCMG Construction Machinery is currently generating about 0.05 per unit of risk. If you would invest 954.00 in Advanced Technology Materials on September 13, 2024 and sell it today you would earn a total of 275.00 from holding Advanced Technology Materials or generate 28.83% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Strong |
Accuracy | 100.0% |
Values | Daily Returns |
Advanced Technology Materials vs. XCMG Construction Machinery
Performance |
Timeline |
Advanced Technology |
XCMG Construction |
Advanced Technology and XCMG Construction Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Advanced Technology and XCMG Construction
The main advantage of trading using opposite Advanced Technology and XCMG Construction positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Advanced Technology position performs unexpectedly, XCMG Construction 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 XCMG Construction will offset losses from the drop in XCMG Construction's long position.Advanced Technology vs. Zijin Mining Group | Advanced Technology vs. Wanhua Chemical Group | Advanced Technology vs. Baoshan Iron Steel | Advanced Technology vs. Shandong Gold Mining |
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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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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