Correlation Between Advanced Technology and Sichuan Hebang
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By analyzing existing cross correlation between Advanced Technology Materials and Sichuan Hebang Biotechnology, you can compare the effects of market volatilities on Advanced Technology and Sichuan Hebang 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 Sichuan Hebang. Check out your portfolio center. Please also check ongoing floating volatility patterns of Advanced Technology and Sichuan Hebang.
Diversification Opportunities for Advanced Technology and Sichuan Hebang
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Advanced and Sichuan is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Advanced Technology Materials and Sichuan Hebang Biotechnology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sichuan Hebang Biote 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 Sichuan Hebang. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sichuan Hebang Biote has no effect on the direction of Advanced Technology i.e., Advanced Technology and Sichuan Hebang go up and down completely randomly.
Pair Corralation between Advanced Technology and Sichuan Hebang
Assuming the 90 days trading horizon Advanced Technology Materials is expected to generate 1.4 times more return on investment than Sichuan Hebang. However, Advanced Technology is 1.4 times more volatile than Sichuan Hebang Biotechnology. It trades about 0.06 of its potential returns per unit of risk. Sichuan Hebang Biotechnology is currently generating about -0.02 per unit of risk. If you would invest 911.00 in Advanced Technology Materials on September 3, 2024 and sell it today you would earn a total of 310.00 from holding Advanced Technology Materials or generate 34.03% 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. Sichuan Hebang Biotechnology
Performance |
| Timeline |
| Advanced Technology |
| Sichuan Hebang Biote |
Advanced Technology and Sichuan Hebang Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Advanced Technology and Sichuan Hebang
The main advantage of trading using opposite Advanced Technology and Sichuan Hebang positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Advanced Technology position performs unexpectedly, Sichuan Hebang 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 Sichuan Hebang will offset losses from the drop in Sichuan Hebang's long position.The idea behind Advanced Technology Materials and Sichuan Hebang Biotechnology 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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