Correlation Between Zhongshan Broad-Ocean and Shanghai Sanyou
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By analyzing existing cross correlation between Zhongshan Broad Ocean Motor and Shanghai Sanyou Medical, you can compare the effects of market volatilities on Zhongshan Broad-Ocean and Shanghai Sanyou 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 Zhongshan Broad-Ocean with a short position of Shanghai Sanyou. Check out your portfolio center. Please also check ongoing floating volatility patterns of Zhongshan Broad-Ocean and Shanghai Sanyou.
Diversification Opportunities for Zhongshan Broad-Ocean and Shanghai Sanyou
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Zhongshan and Shanghai is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Zhongshan Broad Ocean Motor and Shanghai Sanyou Medical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shanghai Sanyou Medical and Zhongshan Broad-Ocean 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 Zhongshan Broad Ocean Motor are associated (or correlated) with Shanghai Sanyou. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shanghai Sanyou Medical has no effect on the direction of Zhongshan Broad-Ocean i.e., Zhongshan Broad-Ocean and Shanghai Sanyou go up and down completely randomly.
Pair Corralation between Zhongshan Broad-Ocean and Shanghai Sanyou
Assuming the 90 days trading horizon Zhongshan Broad Ocean Motor is expected to generate 0.94 times more return on investment than Shanghai Sanyou. However, Zhongshan Broad Ocean Motor is 1.06 times less risky than Shanghai Sanyou. It trades about 0.09 of its potential returns per unit of risk. Shanghai Sanyou Medical is currently generating about -0.13 per unit of risk. If you would invest 552.00 in Zhongshan Broad Ocean Motor on November 3, 2024 and sell it today you would earn a total of 22.00 from holding Zhongshan Broad Ocean Motor or generate 3.99% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Zhongshan Broad Ocean Motor vs. Shanghai Sanyou Medical
Performance |
| Timeline |
| Zhongshan Broad Ocean |
| Shanghai Sanyou Medical |
Zhongshan Broad-Ocean and Shanghai Sanyou Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Zhongshan Broad-Ocean and Shanghai Sanyou
The main advantage of trading using opposite Zhongshan Broad-Ocean and Shanghai Sanyou positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Zhongshan Broad-Ocean position performs unexpectedly, Shanghai Sanyou 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 Sanyou will offset losses from the drop in Shanghai Sanyou's long position.The idea behind Zhongshan Broad Ocean Motor and Shanghai Sanyou Medical 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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