Correlation Between Shanxi Tond and Shenzhen Inovance
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By analyzing existing cross correlation between Shanxi Tond Chemical and Shenzhen Inovance Tech, you can compare the effects of market volatilities on Shanxi Tond and Shenzhen Inovance 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 Shanxi Tond with a short position of Shenzhen Inovance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shanxi Tond and Shenzhen Inovance.
Diversification Opportunities for Shanxi Tond and Shenzhen Inovance
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Shanxi and Shenzhen is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Shanxi Tond Chemical and Shenzhen Inovance Tech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shenzhen Inovance Tech and Shanxi Tond 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 Shanxi Tond Chemical are associated (or correlated) with Shenzhen Inovance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shenzhen Inovance Tech has no effect on the direction of Shanxi Tond i.e., Shanxi Tond and Shenzhen Inovance go up and down completely randomly.
Pair Corralation between Shanxi Tond and Shenzhen Inovance
Assuming the 90 days trading horizon Shanxi Tond is expected to generate 7.72 times less return on investment than Shenzhen Inovance. But when comparing it to its historical volatility, Shanxi Tond Chemical is 1.48 times less risky than Shenzhen Inovance. It trades about 0.01 of its potential returns per unit of risk. Shenzhen Inovance Tech is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 4,990 in Shenzhen Inovance Tech on September 28, 2024 and sell it today you would earn a total of 1,018 from holding Shenzhen Inovance Tech or generate 20.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.19% |
| Values | Daily Returns |
Shanxi Tond Chemical vs. Shenzhen Inovance Tech
Performance |
| Timeline |
| Shanxi Tond Chemical |
| Shenzhen Inovance Tech |
Shanxi Tond and Shenzhen Inovance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shanxi Tond and Shenzhen Inovance
The main advantage of trading using opposite Shanxi Tond and Shenzhen Inovance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shanxi Tond position performs unexpectedly, Shenzhen Inovance 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 Shenzhen Inovance will offset losses from the drop in Shenzhen Inovance's long position.| Shanxi Tond vs. Zijin Mining Group | Shanxi Tond vs. Wanhua Chemical Group | Shanxi Tond vs. Baoshan Iron Steel | Shanxi Tond vs. Shandong Gold Mining |
| Shenzhen Inovance vs. Innovative Medical Management | Shenzhen Inovance vs. Gifore Agricultural Machinery | Shenzhen Inovance vs. JCHX Mining Management | Shenzhen Inovance vs. Long Yuan Construction |
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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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