Correlation Between Shenzhen Noposion and Shandong Ruifeng
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By analyzing existing cross correlation between Shenzhen Noposion Agrochemicals and Shandong Ruifeng Chemical, you can compare the effects of market volatilities on Shenzhen Noposion and Shandong Ruifeng 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 Shandong Ruifeng. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shenzhen Noposion and Shandong Ruifeng.
Diversification Opportunities for Shenzhen Noposion and Shandong Ruifeng
-0.4 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Shenzhen and Shandong is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Shenzhen Noposion Agrochemical and Shandong Ruifeng Chemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shandong Ruifeng Chemical 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 Shandong Ruifeng. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shandong Ruifeng Chemical has no effect on the direction of Shenzhen Noposion i.e., Shenzhen Noposion and Shandong Ruifeng go up and down completely randomly.
Pair Corralation between Shenzhen Noposion and Shandong Ruifeng
Assuming the 90 days trading horizon Shenzhen Noposion Agrochemicals is expected to under-perform the Shandong Ruifeng. In addition to that, Shenzhen Noposion is 1.85 times more volatile than Shandong Ruifeng Chemical. It trades about -0.02 of its total potential returns per unit of risk. Shandong Ruifeng Chemical is currently generating about 0.06 per unit of volatility. If you would invest 920.00 in Shandong Ruifeng Chemical on November 8, 2024 and sell it today you would earn a total of 12.00 from holding Shandong Ruifeng Chemical or generate 1.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 94.12% |
| Values | Daily Returns |
Shenzhen Noposion Agrochemical vs. Shandong Ruifeng Chemical
Performance |
| Timeline |
| Shenzhen Noposion |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Weak
| Shandong Ruifeng Chemical |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Shenzhen Noposion and Shandong Ruifeng Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shenzhen Noposion and Shandong Ruifeng
The main advantage of trading using opposite Shenzhen Noposion and Shandong Ruifeng positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shenzhen Noposion position performs unexpectedly, Shandong Ruifeng 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 Shandong Ruifeng will offset losses from the drop in Shandong Ruifeng's long position.The idea behind Shenzhen Noposion Agrochemicals and Shandong Ruifeng Chemical 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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