Correlation Between Zhejiang Dahua and Shanxi Xishan
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By analyzing existing cross correlation between Zhejiang Dahua Technology and Shanxi Xishan Coal, you can compare the effects of market volatilities on Zhejiang Dahua and Shanxi Xishan 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 Zhejiang Dahua with a short position of Shanxi Xishan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Zhejiang Dahua and Shanxi Xishan.
Diversification Opportunities for Zhejiang Dahua and Shanxi Xishan
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Zhejiang and Shanxi is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Zhejiang Dahua Technology and Shanxi Xishan Coal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shanxi Xishan Coal and Zhejiang Dahua 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 Zhejiang Dahua Technology are associated (or correlated) with Shanxi Xishan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shanxi Xishan Coal has no effect on the direction of Zhejiang Dahua i.e., Zhejiang Dahua and Shanxi Xishan go up and down completely randomly.
Pair Corralation between Zhejiang Dahua and Shanxi Xishan
Assuming the 90 days trading horizon Zhejiang Dahua Technology is expected to generate 1.11 times more return on investment than Shanxi Xishan. However, Zhejiang Dahua is 1.11 times more volatile than Shanxi Xishan Coal. It trades about -0.01 of its potential returns per unit of risk. Shanxi Xishan Coal is currently generating about -0.04 per unit of risk. If you would invest 1,752 in Zhejiang Dahua Technology on September 3, 2024 and sell it today you would lose (119.00) from holding Zhejiang Dahua Technology or give up 6.79% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Zhejiang Dahua Technology vs. Shanxi Xishan Coal
Performance |
| Timeline |
| Zhejiang Dahua Technology |
| Shanxi Xishan Coal |
Zhejiang Dahua and Shanxi Xishan Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Zhejiang Dahua and Shanxi Xishan
The main advantage of trading using opposite Zhejiang Dahua and Shanxi Xishan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Zhejiang Dahua position performs unexpectedly, Shanxi Xishan 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 Shanxi Xishan will offset losses from the drop in Shanxi Xishan's long position.| Zhejiang Dahua vs. State Grid InformationCommunication | Zhejiang Dahua vs. CICT Mobile Communication | Zhejiang Dahua vs. Shenzhen Kexin Communication | Zhejiang Dahua vs. Tongyu Communication |
| Shanxi Xishan vs. Weihai Honglin Electronic | Shanxi Xishan vs. Dongnan Electronics Co | Shanxi Xishan vs. Qumei Furniture Group | Shanxi Xishan vs. Easyhome New Retail |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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