Correlation Between Shenzhen Sunlord and Nanjing Putian
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By analyzing existing cross correlation between Shenzhen Sunlord Electronics and Nanjing Putian Telecommunications, you can compare the effects of market volatilities on Shenzhen Sunlord and Nanjing Putian 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 Sunlord with a short position of Nanjing Putian. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shenzhen Sunlord and Nanjing Putian.
Diversification Opportunities for Shenzhen Sunlord and Nanjing Putian
0.96 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Shenzhen and Nanjing is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Shenzhen Sunlord Electronics and Nanjing Putian Telecommunicati in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nanjing Putian Telec and Shenzhen Sunlord 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 Sunlord Electronics are associated (or correlated) with Nanjing Putian. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nanjing Putian Telec has no effect on the direction of Shenzhen Sunlord i.e., Shenzhen Sunlord and Nanjing Putian go up and down completely randomly.
Pair Corralation between Shenzhen Sunlord and Nanjing Putian
Assuming the 90 days trading horizon Shenzhen Sunlord is expected to generate 3.24 times less return on investment than Nanjing Putian. But when comparing it to its historical volatility, Shenzhen Sunlord Electronics is 1.63 times less risky than Nanjing Putian. It trades about 0.1 of its potential returns per unit of risk. Nanjing Putian Telecommunications is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest 387.00 in Nanjing Putian Telecommunications on August 31, 2024 and sell it today you would earn a total of 73.00 from holding Nanjing Putian Telecommunications or generate 18.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Shenzhen Sunlord Electronics vs. Nanjing Putian Telecommunicati
Performance |
| Timeline |
| Shenzhen Sunlord Ele |
| Nanjing Putian Telec |
Shenzhen Sunlord and Nanjing Putian Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shenzhen Sunlord and Nanjing Putian
The main advantage of trading using opposite Shenzhen Sunlord and Nanjing Putian positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shenzhen Sunlord position performs unexpectedly, Nanjing Putian 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 Nanjing Putian will offset losses from the drop in Nanjing Putian's long position.The idea behind Shenzhen Sunlord Electronics and Nanjing Putian Telecommunications 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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