Correlation Between Shandong Hongchuang and HUAQIN TECHNOLOGY
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By analyzing existing cross correlation between Shandong Hongchuang Aluminum and HUAQIN TECHNOLOGY LTD, you can compare the effects of market volatilities on Shandong Hongchuang and HUAQIN TECHNOLOGY 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 HUAQIN TECHNOLOGY. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shandong Hongchuang and HUAQIN TECHNOLOGY.
Diversification Opportunities for Shandong Hongchuang and HUAQIN TECHNOLOGY
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Shandong and HUAQIN is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Shandong Hongchuang Aluminum and HUAQIN TECHNOLOGY LTD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HUAQIN TECHNOLOGY LTD 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 HUAQIN TECHNOLOGY. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HUAQIN TECHNOLOGY LTD has no effect on the direction of Shandong Hongchuang i.e., Shandong Hongchuang and HUAQIN TECHNOLOGY go up and down completely randomly.
Pair Corralation between Shandong Hongchuang and HUAQIN TECHNOLOGY
Assuming the 90 days trading horizon Shandong Hongchuang Aluminum is expected to generate 1.07 times more return on investment than HUAQIN TECHNOLOGY. However, Shandong Hongchuang is 1.07 times more volatile than HUAQIN TECHNOLOGY LTD. It trades about 0.08 of its potential returns per unit of risk. HUAQIN TECHNOLOGY LTD is currently generating about 0.04 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 | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Shandong Hongchuang Aluminum vs. HUAQIN TECHNOLOGY LTD
Performance |
| Timeline |
| Shandong Hongchuang |
| HUAQIN TECHNOLOGY LTD |
Shandong Hongchuang and HUAQIN TECHNOLOGY Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shandong Hongchuang and HUAQIN TECHNOLOGY
The main advantage of trading using opposite Shandong Hongchuang and HUAQIN TECHNOLOGY positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shandong Hongchuang position performs unexpectedly, HUAQIN TECHNOLOGY 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 HUAQIN TECHNOLOGY will offset losses from the drop in HUAQIN TECHNOLOGY's long position.| Shandong Hongchuang vs. Zijin Mining Group | Shandong Hongchuang vs. Baoshan Iron Steel | Shandong Hongchuang vs. Hoshine Silicon Ind |
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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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