Correlation Between Xiangtan Electrochemical and Dazhong Transportation
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By analyzing existing cross correlation between Xiangtan Electrochemical Scientific and Dazhong Transportation Group, you can compare the effects of market volatilities on Xiangtan Electrochemical and Dazhong Transportation 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 Xiangtan Electrochemical with a short position of Dazhong Transportation. Check out your portfolio center. Please also check ongoing floating volatility patterns of Xiangtan Electrochemical and Dazhong Transportation.
Diversification Opportunities for Xiangtan Electrochemical and Dazhong Transportation
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Xiangtan and Dazhong is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Xiangtan Electrochemical Scien and Dazhong Transportation Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dazhong Transportation and Xiangtan Electrochemical 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 Xiangtan Electrochemical Scientific are associated (or correlated) with Dazhong Transportation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dazhong Transportation has no effect on the direction of Xiangtan Electrochemical i.e., Xiangtan Electrochemical and Dazhong Transportation go up and down completely randomly.
Pair Corralation between Xiangtan Electrochemical and Dazhong Transportation
Assuming the 90 days trading horizon Xiangtan Electrochemical Scientific is expected to generate 1.37 times more return on investment than Dazhong Transportation. However, Xiangtan Electrochemical is 1.37 times more volatile than Dazhong Transportation Group. It trades about 0.15 of its potential returns per unit of risk. Dazhong Transportation Group is currently generating about 0.08 per unit of risk. If you would invest 1,043 in Xiangtan Electrochemical Scientific on September 1, 2024 and sell it today you would earn a total of 116.00 from holding Xiangtan Electrochemical Scientific or generate 11.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Xiangtan Electrochemical Scien vs. Dazhong Transportation Group
Performance |
| Timeline |
| Xiangtan Electrochemical |
| Dazhong Transportation |
Xiangtan Electrochemical and Dazhong Transportation Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Xiangtan Electrochemical and Dazhong Transportation
The main advantage of trading using opposite Xiangtan Electrochemical and Dazhong Transportation positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Xiangtan Electrochemical position performs unexpectedly, Dazhong Transportation 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 Dazhong Transportation will offset losses from the drop in Dazhong Transportation's long position.The idea behind Xiangtan Electrochemical Scientific and Dazhong Transportation Group 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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