Correlation Between Sichuan Fulin and Heilongjiang Transport
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By analyzing existing cross correlation between Sichuan Fulin Transportation and Heilongjiang Transport Development, you can compare the effects of market volatilities on Sichuan Fulin and Heilongjiang Transport 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 Heilongjiang Transport. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sichuan Fulin and Heilongjiang Transport.
Diversification Opportunities for Sichuan Fulin and Heilongjiang Transport
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Sichuan and Heilongjiang is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Sichuan Fulin Transportation and Heilongjiang Transport Develop in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Heilongjiang Transport 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 Heilongjiang Transport. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Heilongjiang Transport has no effect on the direction of Sichuan Fulin i.e., Sichuan Fulin and Heilongjiang Transport go up and down completely randomly.
Pair Corralation between Sichuan Fulin and Heilongjiang Transport
Assuming the 90 days trading horizon Sichuan Fulin Transportation is expected to generate 1.47 times more return on investment than Heilongjiang Transport. However, Sichuan Fulin is 1.47 times more volatile than Heilongjiang Transport Development. It trades about 0.33 of its potential returns per unit of risk. Heilongjiang Transport Development is currently generating about 0.07 per unit of risk. If you would invest 679.00 in Sichuan Fulin Transportation on November 8, 2024 and sell it today you would earn a total of 79.00 from holding Sichuan Fulin Transportation or generate 11.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sichuan Fulin Transportation vs. Heilongjiang Transport Develop
Performance |
| Timeline |
| Sichuan Fulin Transp |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
OK
| Heilongjiang Transport |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Sichuan Fulin and Heilongjiang Transport Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sichuan Fulin and Heilongjiang Transport
The main advantage of trading using opposite Sichuan Fulin and Heilongjiang Transport positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sichuan Fulin position performs unexpectedly, Heilongjiang Transport 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 Heilongjiang Transport will offset losses from the drop in Heilongjiang Transport's long position.The idea behind Sichuan Fulin Transportation and Heilongjiang Transport Development 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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