Correlation Between ZYF Lopsking and Weihai Honglin
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By analyzing existing cross correlation between ZYF Lopsking Aluminum and Weihai Honglin Electronic, you can compare the effects of market volatilities on ZYF Lopsking and Weihai Honglin 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 ZYF Lopsking with a short position of Weihai Honglin. Check out your portfolio center. Please also check ongoing floating volatility patterns of ZYF Lopsking and Weihai Honglin.
Diversification Opportunities for ZYF Lopsking and Weihai Honglin
-0.25 | Correlation Coefficient |
Very good diversification
The 3 months correlation between ZYF and Weihai is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding ZYF Lopsking Aluminum and Weihai Honglin Electronic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Weihai Honglin Electronic and ZYF Lopsking 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 ZYF Lopsking Aluminum are associated (or correlated) with Weihai Honglin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Weihai Honglin Electronic has no effect on the direction of ZYF Lopsking i.e., ZYF Lopsking and Weihai Honglin go up and down completely randomly.
Pair Corralation between ZYF Lopsking and Weihai Honglin
Assuming the 90 days trading horizon ZYF Lopsking is expected to generate 1.89 times less return on investment than Weihai Honglin. But when comparing it to its historical volatility, ZYF Lopsking Aluminum is 1.35 times less risky than Weihai Honglin. It trades about 0.09 of its potential returns per unit of risk. Weihai Honglin Electronic is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 1,490 in Weihai Honglin Electronic on November 7, 2024 and sell it today you would earn a total of 117.00 from holding Weihai Honglin Electronic or generate 7.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
ZYF Lopsking Aluminum vs. Weihai Honglin Electronic
Performance |
| Timeline |
| ZYF Lopsking Aluminum |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Weihai Honglin Electronic |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Modest
ZYF Lopsking and Weihai Honglin Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ZYF Lopsking and Weihai Honglin
The main advantage of trading using opposite ZYF Lopsking and Weihai Honglin positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ZYF Lopsking position performs unexpectedly, Weihai Honglin 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 Weihai Honglin will offset losses from the drop in Weihai Honglin's long position.The idea behind ZYF Lopsking Aluminum and Weihai Honglin Electronic 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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