Correlation Between Advanced Technology and Shanghai Yanpu
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By analyzing existing cross correlation between Advanced Technology Materials and Shanghai Yanpu Metal, you can compare the effects of market volatilities on Advanced Technology and Shanghai Yanpu 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 Shanghai Yanpu. Check out your portfolio center. Please also check ongoing floating volatility patterns of Advanced Technology and Shanghai Yanpu.
Diversification Opportunities for Advanced Technology and Shanghai Yanpu
0.35 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Advanced and Shanghai is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Advanced Technology Materials and Shanghai Yanpu Metal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shanghai Yanpu Metal 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 Shanghai Yanpu. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shanghai Yanpu Metal has no effect on the direction of Advanced Technology i.e., Advanced Technology and Shanghai Yanpu go up and down completely randomly.
Pair Corralation between Advanced Technology and Shanghai Yanpu
Assuming the 90 days trading horizon Advanced Technology Materials is expected to generate 0.83 times more return on investment than Shanghai Yanpu. However, Advanced Technology Materials is 1.2 times less risky than Shanghai Yanpu. It trades about 0.04 of its potential returns per unit of risk. Shanghai Yanpu Metal is currently generating about 0.01 per unit of risk. If you would invest 871.00 in Advanced Technology Materials on November 1, 2024 and sell it today you would earn a total of 281.00 from holding Advanced Technology Materials or generate 32.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Advanced Technology Materials vs. Shanghai Yanpu Metal
Performance |
| Timeline |
| Advanced Technology |
| Shanghai Yanpu Metal |
Advanced Technology and Shanghai Yanpu Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Advanced Technology and Shanghai Yanpu
The main advantage of trading using opposite Advanced Technology and Shanghai Yanpu positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Advanced Technology position performs unexpectedly, Shanghai Yanpu 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 Yanpu will offset losses from the drop in Shanghai Yanpu's long position.The idea behind Advanced Technology Materials and Shanghai Yanpu Metal 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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