Correlation Between Sichuan Fulin and Changjiang Jinggong
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By analyzing existing cross correlation between Sichuan Fulin Transportation and Changjiang Jinggong Steel, you can compare the effects of market volatilities on Sichuan Fulin and Changjiang Jinggong 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 Changjiang Jinggong. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sichuan Fulin and Changjiang Jinggong.
Diversification Opportunities for Sichuan Fulin and Changjiang Jinggong
0.32 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Sichuan and Changjiang is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Sichuan Fulin Transportation and Changjiang Jinggong Steel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Changjiang Jinggong Steel 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 Changjiang Jinggong. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Changjiang Jinggong Steel has no effect on the direction of Sichuan Fulin i.e., Sichuan Fulin and Changjiang Jinggong go up and down completely randomly.
Pair Corralation between Sichuan Fulin and Changjiang Jinggong
Assuming the 90 days trading horizon Sichuan Fulin Transportation is expected to generate 1.99 times more return on investment than Changjiang Jinggong. However, Sichuan Fulin is 1.99 times more volatile than Changjiang Jinggong Steel. It trades about 0.33 of its potential returns per unit of risk. Changjiang Jinggong Steel is currently generating about 0.02 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 | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sichuan Fulin Transportation vs. Changjiang Jinggong Steel
Performance |
| Timeline |
| Sichuan Fulin Transp |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
OK
| Changjiang Jinggong Steel |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Sichuan Fulin and Changjiang Jinggong Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sichuan Fulin and Changjiang Jinggong
The main advantage of trading using opposite Sichuan Fulin and Changjiang Jinggong positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sichuan Fulin position performs unexpectedly, Changjiang Jinggong 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 Changjiang Jinggong will offset losses from the drop in Changjiang Jinggong's long position.The idea behind Sichuan Fulin Transportation and Changjiang Jinggong Steel 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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