Correlation Between Shandong Hongchuang and Yunnan Jianzhijia
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By analyzing existing cross correlation between Shandong Hongchuang Aluminum and Yunnan Jianzhijia Health Chain, you can compare the effects of market volatilities on Shandong Hongchuang and Yunnan Jianzhijia 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 Yunnan Jianzhijia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shandong Hongchuang and Yunnan Jianzhijia.
Diversification Opportunities for Shandong Hongchuang and Yunnan Jianzhijia
-0.68 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Shandong and Yunnan is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding Shandong Hongchuang Aluminum and Yunnan Jianzhijia Health Chain in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Yunnan Jianzhijia 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 Yunnan Jianzhijia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Yunnan Jianzhijia has no effect on the direction of Shandong Hongchuang i.e., Shandong Hongchuang and Yunnan Jianzhijia go up and down completely randomly.
Pair Corralation between Shandong Hongchuang and Yunnan Jianzhijia
Assuming the 90 days trading horizon Shandong Hongchuang Aluminum is expected to generate 1.3 times more return on investment than Yunnan Jianzhijia. However, Shandong Hongchuang is 1.3 times more volatile than Yunnan Jianzhijia Health Chain. It trades about 0.27 of its potential returns per unit of risk. Yunnan Jianzhijia Health Chain is currently generating about -0.14 per unit of risk. If you would invest 732.00 in Shandong Hongchuang Aluminum on October 30, 2024 and sell it today you would earn a total of 309.00 from holding Shandong Hongchuang Aluminum or generate 42.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 97.56% |
| Values | Daily Returns |
Shandong Hongchuang Aluminum vs. Yunnan Jianzhijia Health Chain
Performance |
| Timeline |
| Shandong Hongchuang |
| Yunnan Jianzhijia |
Shandong Hongchuang and Yunnan Jianzhijia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shandong Hongchuang and Yunnan Jianzhijia
The main advantage of trading using opposite Shandong Hongchuang and Yunnan Jianzhijia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shandong Hongchuang position performs unexpectedly, Yunnan Jianzhijia 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 Yunnan Jianzhijia will offset losses from the drop in Yunnan Jianzhijia's long position.The idea behind Shandong Hongchuang Aluminum and Yunnan Jianzhijia Health Chain 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.
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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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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