Correlation Between Qingdao Foods and Shanghai Yanpu
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By analyzing existing cross correlation between Qingdao Foods Co and Shanghai Yanpu Metal, you can compare the effects of market volatilities on Qingdao Foods 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 Qingdao Foods with a short position of Shanghai Yanpu. Check out your portfolio center. Please also check ongoing floating volatility patterns of Qingdao Foods and Shanghai Yanpu.
Diversification Opportunities for Qingdao Foods and Shanghai Yanpu
0.47 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Qingdao and Shanghai is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Qingdao Foods Co 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 Qingdao Foods 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 Qingdao Foods Co 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 Qingdao Foods i.e., Qingdao Foods and Shanghai Yanpu go up and down completely randomly.
Pair Corralation between Qingdao Foods and Shanghai Yanpu
Assuming the 90 days trading horizon Qingdao Foods is expected to generate 7.8 times less return on investment than Shanghai Yanpu. But when comparing it to its historical volatility, Qingdao Foods Co is 1.1 times less risky than Shanghai Yanpu. It trades about 0.02 of its potential returns per unit of risk. Shanghai Yanpu Metal is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 3,612 in Shanghai Yanpu Metal on November 8, 2024 and sell it today you would earn a total of 156.00 from holding Shanghai Yanpu Metal or generate 4.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Qingdao Foods Co vs. Shanghai Yanpu Metal
Performance |
| Timeline |
| Qingdao Foods |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Shanghai Yanpu Metal |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Qingdao Foods and Shanghai Yanpu Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Qingdao Foods and Shanghai Yanpu
The main advantage of trading using opposite Qingdao Foods and Shanghai Yanpu positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Qingdao Foods 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 Qingdao Foods Co 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.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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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