Correlation Between Shenzhen Noposion and Anhui Fuhuang
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By analyzing existing cross correlation between Shenzhen Noposion Agrochemicals and Anhui Fuhuang Steel, you can compare the effects of market volatilities on Shenzhen Noposion and Anhui Fuhuang 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 Noposion with a short position of Anhui Fuhuang. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shenzhen Noposion and Anhui Fuhuang.
Diversification Opportunities for Shenzhen Noposion and Anhui Fuhuang
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Shenzhen and Anhui is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Shenzhen Noposion Agrochemical and Anhui Fuhuang Steel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Anhui Fuhuang Steel and Shenzhen Noposion 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 Noposion Agrochemicals are associated (or correlated) with Anhui Fuhuang. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Anhui Fuhuang Steel has no effect on the direction of Shenzhen Noposion i.e., Shenzhen Noposion and Anhui Fuhuang go up and down completely randomly.
Pair Corralation between Shenzhen Noposion and Anhui Fuhuang
Assuming the 90 days trading horizon Shenzhen Noposion Agrochemicals is expected to generate 0.92 times more return on investment than Anhui Fuhuang. However, Shenzhen Noposion Agrochemicals is 1.09 times less risky than Anhui Fuhuang. It trades about 0.05 of its potential returns per unit of risk. Anhui Fuhuang Steel is currently generating about 0.02 per unit of risk. If you would invest 635.00 in Shenzhen Noposion Agrochemicals on November 8, 2024 and sell it today you would earn a total of 379.00 from holding Shenzhen Noposion Agrochemicals or generate 59.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.58% |
| Values | Daily Returns |
Shenzhen Noposion Agrochemical vs. Anhui Fuhuang Steel
Performance |
| Timeline |
| Shenzhen Noposion |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Weak
| Anhui Fuhuang Steel |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Weak
Shenzhen Noposion and Anhui Fuhuang Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shenzhen Noposion and Anhui Fuhuang
The main advantage of trading using opposite Shenzhen Noposion and Anhui Fuhuang positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shenzhen Noposion position performs unexpectedly, Anhui Fuhuang 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 Anhui Fuhuang will offset losses from the drop in Anhui Fuhuang's long position.The idea behind Shenzhen Noposion Agrochemicals and Anhui Fuhuang Steel 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 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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