Correlation Between Changchun and Shanghai Shibei
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By analyzing existing cross correlation between Changchun UP Optotech and Shanghai Shibei Hi Tech, you can compare the effects of market volatilities on Changchun and Shanghai Shibei 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 Changchun with a short position of Shanghai Shibei. Check out your portfolio center. Please also check ongoing floating volatility patterns of Changchun and Shanghai Shibei.
Diversification Opportunities for Changchun and Shanghai Shibei
0.47 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Changchun and Shanghai is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Changchun UP Optotech and Shanghai Shibei Hi Tech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shanghai Shibei Hi and Changchun 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 Changchun UP Optotech are associated (or correlated) with Shanghai Shibei. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shanghai Shibei Hi has no effect on the direction of Changchun i.e., Changchun and Shanghai Shibei go up and down completely randomly.
Pair Corralation between Changchun and Shanghai Shibei
Assuming the 90 days trading horizon Changchun UP Optotech is expected to under-perform the Shanghai Shibei. But the stock apears to be less risky and, when comparing its historical volatility, Changchun UP Optotech is 1.52 times less risky than Shanghai Shibei. The stock trades about -0.09 of its potential returns per unit of risk. The Shanghai Shibei Hi Tech is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest 490.00 in Shanghai Shibei Hi Tech on October 30, 2024 and sell it today you would lose (44.00) from holding Shanghai Shibei Hi Tech or give up 8.98% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Changchun UP Optotech vs. Shanghai Shibei Hi Tech
Performance |
| Timeline |
| Changchun UP Optotech |
| Shanghai Shibei Hi |
Changchun and Shanghai Shibei Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Changchun and Shanghai Shibei
The main advantage of trading using opposite Changchun and Shanghai Shibei positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Changchun position performs unexpectedly, Shanghai Shibei 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 Shibei will offset losses from the drop in Shanghai Shibei's long position.| Changchun vs. Wuhan Yangtze Communication | Changchun vs. Queclink Wireless Solutions | Changchun vs. Zotye Automobile Co | Changchun vs. Ningbo Fangzheng Automobile |
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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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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