Correlation Between Shandong Hongchuang and Tongling Nonferrous
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By analyzing existing cross correlation between Shandong Hongchuang Aluminum and Tongling Nonferrous Metals, you can compare the effects of market volatilities on Shandong Hongchuang and Tongling Nonferrous 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 Shandong Hongchuang with a short position of Tongling Nonferrous. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shandong Hongchuang and Tongling Nonferrous.
Diversification Opportunities for Shandong Hongchuang and Tongling Nonferrous
-0.43 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Shandong and Tongling is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Shandong Hongchuang Aluminum and Tongling Nonferrous Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tongling Nonferrous and Shandong Hongchuang 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 Shandong Hongchuang Aluminum are associated (or correlated) with Tongling Nonferrous. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tongling Nonferrous has no effect on the direction of Shandong Hongchuang i.e., Shandong Hongchuang and Tongling Nonferrous go up and down completely randomly.
Pair Corralation between Shandong Hongchuang and Tongling Nonferrous
Assuming the 90 days trading horizon Shandong Hongchuang Aluminum is expected to generate 3.25 times more return on investment than Tongling Nonferrous. However, Shandong Hongchuang is 3.25 times more volatile than Tongling Nonferrous Metals. It trades about 0.09 of its potential returns per unit of risk. Tongling Nonferrous Metals is currently generating about 0.08 per unit of risk. If you would invest 987.00 in Shandong Hongchuang Aluminum on November 8, 2024 and sell it today you would earn a total of 46.00 from holding Shandong Hongchuang Aluminum or generate 4.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Shandong Hongchuang Aluminum vs. Tongling Nonferrous Metals
Performance |
| Timeline |
| Shandong Hongchuang |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Good
| Tongling Nonferrous |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Shandong Hongchuang and Tongling Nonferrous Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shandong Hongchuang and Tongling Nonferrous
The main advantage of trading using opposite Shandong Hongchuang and Tongling Nonferrous positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shandong Hongchuang position performs unexpectedly, Tongling Nonferrous 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 Tongling Nonferrous will offset losses from the drop in Tongling Nonferrous' long position.The idea behind Shandong Hongchuang Aluminum and Tongling Nonferrous Metals 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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