Correlation Between Guangdong Jingyi and Sichuan Yahua
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By analyzing existing cross correlation between Guangdong Jingyi Metal and Sichuan Yahua Industrial, you can compare the effects of market volatilities on Guangdong Jingyi and Sichuan Yahua 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 Guangdong Jingyi with a short position of Sichuan Yahua. Check out your portfolio center. Please also check ongoing floating volatility patterns of Guangdong Jingyi and Sichuan Yahua.
Diversification Opportunities for Guangdong Jingyi and Sichuan Yahua
0.51 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Guangdong and Sichuan is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Guangdong Jingyi Metal and Sichuan Yahua Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sichuan Yahua Industrial and Guangdong Jingyi 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 Guangdong Jingyi Metal are associated (or correlated) with Sichuan Yahua. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sichuan Yahua Industrial has no effect on the direction of Guangdong Jingyi i.e., Guangdong Jingyi and Sichuan Yahua go up and down completely randomly.
Pair Corralation between Guangdong Jingyi and Sichuan Yahua
Assuming the 90 days trading horizon Guangdong Jingyi Metal is expected to generate 0.75 times more return on investment than Sichuan Yahua. However, Guangdong Jingyi Metal is 1.33 times less risky than Sichuan Yahua. It trades about 0.45 of its potential returns per unit of risk. Sichuan Yahua Industrial is currently generating about 0.32 per unit of risk. If you would invest 620.00 in Guangdong Jingyi Metal on November 7, 2024 and sell it today you would earn a total of 109.00 from holding Guangdong Jingyi Metal or generate 17.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Guangdong Jingyi Metal vs. Sichuan Yahua Industrial
Performance |
| Timeline |
| Guangdong Jingyi Metal |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Weak
| Sichuan Yahua Industrial |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
OK
Guangdong Jingyi and Sichuan Yahua Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Guangdong Jingyi and Sichuan Yahua
The main advantage of trading using opposite Guangdong Jingyi and Sichuan Yahua positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Guangdong Jingyi position performs unexpectedly, Sichuan Yahua 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 Sichuan Yahua will offset losses from the drop in Sichuan Yahua's long position.The idea behind Guangdong Jingyi Metal and Sichuan Yahua Industrial 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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