Correlation Between Sichuan Fulin and Guangzhou Tinci
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By analyzing existing cross correlation between Sichuan Fulin Transportation and Guangzhou Tinci Materials, you can compare the effects of market volatilities on Sichuan Fulin and Guangzhou Tinci 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 Sichuan Fulin with a short position of Guangzhou Tinci. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sichuan Fulin and Guangzhou Tinci.
Diversification Opportunities for Sichuan Fulin and Guangzhou Tinci
0.16 | Correlation Coefficient |
Average diversification
The 3 months correlation between Sichuan and Guangzhou is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Sichuan Fulin Transportation and Guangzhou Tinci Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guangzhou Tinci Materials and Sichuan Fulin 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 Sichuan Fulin Transportation are associated (or correlated) with Guangzhou Tinci. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guangzhou Tinci Materials has no effect on the direction of Sichuan Fulin i.e., Sichuan Fulin and Guangzhou Tinci go up and down completely randomly.
Pair Corralation between Sichuan Fulin and Guangzhou Tinci
Assuming the 90 days trading horizon Sichuan Fulin Transportation is expected to generate 1.37 times more return on investment than Guangzhou Tinci. However, Sichuan Fulin is 1.37 times more volatile than Guangzhou Tinci Materials. It trades about 0.33 of its potential returns per unit of risk. Guangzhou Tinci Materials is currently generating about 0.1 per unit of risk. If you would invest 648.00 in Sichuan Fulin Transportation on November 7, 2024 and sell it today you would earn a total of 84.00 from holding Sichuan Fulin Transportation or generate 12.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sichuan Fulin Transportation vs. Guangzhou Tinci Materials
Performance |
| Timeline |
| Sichuan Fulin Transp |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
OK
| Guangzhou Tinci Materials |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Sichuan Fulin and Guangzhou Tinci Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sichuan Fulin and Guangzhou Tinci
The main advantage of trading using opposite Sichuan Fulin and Guangzhou Tinci positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sichuan Fulin position performs unexpectedly, Guangzhou Tinci 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 Guangzhou Tinci will offset losses from the drop in Guangzhou Tinci's long position.The idea behind Sichuan Fulin Transportation and Guangzhou Tinci Materials 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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