Correlation Between Sichuan Fulin and Anhui Jianghuai
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By analyzing existing cross correlation between Sichuan Fulin Transportation and Anhui Jianghuai Automobile, you can compare the effects of market volatilities on Sichuan Fulin and Anhui Jianghuai 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 Anhui Jianghuai. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sichuan Fulin and Anhui Jianghuai.
Diversification Opportunities for Sichuan Fulin and Anhui Jianghuai
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Sichuan and Anhui is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Sichuan Fulin Transportation and Anhui Jianghuai Automobile in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Anhui Jianghuai Auto 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 Anhui Jianghuai. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Anhui Jianghuai Auto has no effect on the direction of Sichuan Fulin i.e., Sichuan Fulin and Anhui Jianghuai go up and down completely randomly.
Pair Corralation between Sichuan Fulin and Anhui Jianghuai
Assuming the 90 days trading horizon Sichuan Fulin is expected to generate 4.05 times less return on investment than Anhui Jianghuai. But when comparing it to its historical volatility, Sichuan Fulin Transportation is 1.31 times less risky than Anhui Jianghuai. It trades about 0.05 of its potential returns per unit of risk. Anhui Jianghuai Automobile is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest 1,592 in Anhui Jianghuai Automobile on September 3, 2024 and sell it today you would earn a total of 1,919 from holding Anhui Jianghuai Automobile or generate 120.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sichuan Fulin Transportation vs. Anhui Jianghuai Automobile
Performance |
| Timeline |
| Sichuan Fulin Transp |
| Anhui Jianghuai Auto |
Sichuan Fulin and Anhui Jianghuai Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sichuan Fulin and Anhui Jianghuai
The main advantage of trading using opposite Sichuan Fulin and Anhui Jianghuai positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sichuan Fulin position performs unexpectedly, Anhui Jianghuai 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 Anhui Jianghuai will offset losses from the drop in Anhui Jianghuai's long position.| Sichuan Fulin vs. Humanwell Healthcare Group | Sichuan Fulin vs. Healthcare Co | Sichuan Fulin vs. Xizi Clean Energy | Sichuan Fulin vs. Yunnan Jianzhijia Health Chain |
| Anhui Jianghuai vs. PetroChina Co Ltd | Anhui Jianghuai vs. China Mobile Limited | Anhui Jianghuai vs. Industrial and Commercial | Anhui Jianghuai vs. China Life Insurance |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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