Correlation Between Shandong Hongchuang and Zhangzhou Pientzehuang
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By analyzing existing cross correlation between Shandong Hongchuang Aluminum and Zhangzhou Pientzehuang Pharmaceutical, you can compare the effects of market volatilities on Shandong Hongchuang and Zhangzhou Pientzehuang 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 Zhangzhou Pientzehuang. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shandong Hongchuang and Zhangzhou Pientzehuang.
Diversification Opportunities for Shandong Hongchuang and Zhangzhou Pientzehuang
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Shandong and Zhangzhou is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Shandong Hongchuang Aluminum and Zhangzhou Pientzehuang Pharmac in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zhangzhou Pientzehuang 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 Zhangzhou Pientzehuang. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zhangzhou Pientzehuang has no effect on the direction of Shandong Hongchuang i.e., Shandong Hongchuang and Zhangzhou Pientzehuang go up and down completely randomly.
Pair Corralation between Shandong Hongchuang and Zhangzhou Pientzehuang
Assuming the 90 days trading horizon Shandong Hongchuang Aluminum is expected to generate 1.28 times more return on investment than Zhangzhou Pientzehuang. However, Shandong Hongchuang is 1.28 times more volatile than Zhangzhou Pientzehuang Pharmaceutical. It trades about 0.08 of its potential returns per unit of risk. Zhangzhou Pientzehuang Pharmaceutical is currently generating about 0.02 per unit of risk. If you would invest 575.00 in Shandong Hongchuang Aluminum on September 3, 2024 and sell it today you would earn a total of 157.00 from holding Shandong Hongchuang Aluminum or generate 27.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Shandong Hongchuang Aluminum vs. Zhangzhou Pientzehuang Pharmac
Performance |
| Timeline |
| Shandong Hongchuang |
| Zhangzhou Pientzehuang |
Shandong Hongchuang and Zhangzhou Pientzehuang Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shandong Hongchuang and Zhangzhou Pientzehuang
The main advantage of trading using opposite Shandong Hongchuang and Zhangzhou Pientzehuang positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shandong Hongchuang position performs unexpectedly, Zhangzhou Pientzehuang 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 Zhangzhou Pientzehuang will offset losses from the drop in Zhangzhou Pientzehuang's long position.| Shandong Hongchuang vs. Zijin Mining Group | Shandong Hongchuang vs. Baoshan Iron Steel | Shandong Hongchuang vs. Rongsheng Petrochemical Co | Shandong Hongchuang vs. Hoshine Silicon Ind |
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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