Correlation Between Shenzhen Clou and Zhengping RoadBridge
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By analyzing existing cross correlation between Shenzhen Clou Electronics and Zhengping RoadBridge Constr, you can compare the effects of market volatilities on Shenzhen Clou and Zhengping RoadBridge 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 Shenzhen Clou with a short position of Zhengping RoadBridge. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shenzhen Clou and Zhengping RoadBridge.
Diversification Opportunities for Shenzhen Clou and Zhengping RoadBridge
0.32 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Shenzhen and Zhengping is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Shenzhen Clou Electronics and Zhengping RoadBridge Constr in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zhengping RoadBridge and Shenzhen Clou 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 Shenzhen Clou Electronics are associated (or correlated) with Zhengping RoadBridge. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zhengping RoadBridge has no effect on the direction of Shenzhen Clou i.e., Shenzhen Clou and Zhengping RoadBridge go up and down completely randomly.
Pair Corralation between Shenzhen Clou and Zhengping RoadBridge
Assuming the 90 days trading horizon Shenzhen Clou is expected to generate 5.31 times less return on investment than Zhengping RoadBridge. But when comparing it to its historical volatility, Shenzhen Clou Electronics is 1.55 times less risky than Zhengping RoadBridge. It trades about 0.02 of its potential returns per unit of risk. Zhengping RoadBridge Constr is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 194.00 in Zhengping RoadBridge Constr on November 8, 2024 and sell it today you would earn a total of 143.00 from holding Zhengping RoadBridge Constr or generate 73.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Shenzhen Clou Electronics vs. Zhengping RoadBridge Constr
Performance |
| Timeline |
| Shenzhen Clou Electronics |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Zhengping RoadBridge |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Insignificant
Shenzhen Clou and Zhengping RoadBridge Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shenzhen Clou and Zhengping RoadBridge
The main advantage of trading using opposite Shenzhen Clou and Zhengping RoadBridge positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shenzhen Clou position performs unexpectedly, Zhengping RoadBridge 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 Zhengping RoadBridge will offset losses from the drop in Zhengping RoadBridge's long position.The idea behind Shenzhen Clou Electronics and Zhengping RoadBridge Constr 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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