Correlation Between Innovative Medical and Shanghai Shibei
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By analyzing existing cross correlation between Innovative Medical Management and Shanghai Shibei Hi Tech, you can compare the effects of market volatilities on Innovative Medical and Shanghai Shibei 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 Innovative Medical with a short position of Shanghai Shibei. Check out your portfolio center. Please also check ongoing floating volatility patterns of Innovative Medical and Shanghai Shibei.
Diversification Opportunities for Innovative Medical and Shanghai Shibei
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Innovative and Shanghai is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Innovative Medical Management and Shanghai Shibei Hi Tech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shanghai Shibei Hi and Innovative Medical 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 Innovative Medical Management are associated (or correlated) with Shanghai Shibei. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shanghai Shibei Hi has no effect on the direction of Innovative Medical i.e., Innovative Medical and Shanghai Shibei go up and down completely randomly.
Pair Corralation between Innovative Medical and Shanghai Shibei
Assuming the 90 days trading horizon Innovative Medical Management is expected to under-perform the Shanghai Shibei. In addition to that, Innovative Medical is 2.25 times more volatile than Shanghai Shibei Hi Tech. It trades about 0.0 of its total potential returns per unit of risk. Shanghai Shibei Hi Tech is currently generating about 0.08 per unit of volatility. If you would invest 437.00 in Shanghai Shibei Hi Tech on November 5, 2024 and sell it today you would earn a total of 9.00 from holding Shanghai Shibei Hi Tech or generate 2.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Innovative Medical Management vs. Shanghai Shibei Hi Tech
Performance |
| Timeline |
| Innovative Medical |
| Shanghai Shibei Hi |
Innovative Medical and Shanghai Shibei Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Innovative Medical and Shanghai Shibei
The main advantage of trading using opposite Innovative Medical and Shanghai Shibei positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Innovative Medical position performs unexpectedly, Shanghai Shibei 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 Shibei will offset losses from the drop in Shanghai Shibei's long position.The idea behind Innovative Medical Management and Shanghai Shibei Hi Tech 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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