Correlation Between Lianhe Chemical and Shandong Polymer
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By analyzing existing cross correlation between Lianhe Chemical Technology and Shandong Polymer Biochemicals, you can compare the effects of market volatilities on Lianhe Chemical and Shandong Polymer 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 Lianhe Chemical with a short position of Shandong Polymer. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lianhe Chemical and Shandong Polymer.
Diversification Opportunities for Lianhe Chemical and Shandong Polymer
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Lianhe and Shandong is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Lianhe Chemical Technology and Shandong Polymer Biochemicals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shandong Polymer Bio and Lianhe Chemical 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 Lianhe Chemical Technology are associated (or correlated) with Shandong Polymer. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shandong Polymer Bio has no effect on the direction of Lianhe Chemical i.e., Lianhe Chemical and Shandong Polymer go up and down completely randomly.
Pair Corralation between Lianhe Chemical and Shandong Polymer
Assuming the 90 days trading horizon Lianhe Chemical is expected to generate 3.18 times less return on investment than Shandong Polymer. But when comparing it to its historical volatility, Lianhe Chemical Technology is 1.18 times less risky than Shandong Polymer. It trades about 0.02 of its potential returns per unit of risk. Shandong Polymer Biochemicals is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 474.00 in Shandong Polymer Biochemicals on September 15, 2024 and sell it today you would earn a total of 11.00 from holding Shandong Polymer Biochemicals or generate 2.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lianhe Chemical Technology vs. Shandong Polymer Biochemicals
Performance |
| Timeline |
| Lianhe Chemical Tech |
| Shandong Polymer Bio |
Lianhe Chemical and Shandong Polymer Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lianhe Chemical and Shandong Polymer
The main advantage of trading using opposite Lianhe Chemical and Shandong Polymer positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lianhe Chemical position performs unexpectedly, Shandong Polymer 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 Polymer will offset losses from the drop in Shandong Polymer's long position.| Lianhe Chemical vs. Anhui Jianghuai Automobile | Lianhe Chemical vs. Hengkang Medical Group | Lianhe Chemical vs. Railway Signal Communication | Lianhe Chemical vs. Eastern Communications Co |
| Shandong Polymer vs. Anhui Deli Household | Shandong Polymer vs. Jahen Household Products | Shandong Polymer vs. Fujian Rongji Software | Shandong Polymer vs. Lianhe Chemical Technology |
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 Anywhere module to track or share privately all of your investments from the convenience of any device.
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