Correlation Between Shandong Hongchuang and Shenzhen Transsion
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By analyzing existing cross correlation between Shandong Hongchuang Aluminum and Shenzhen Transsion Holdings, you can compare the effects of market volatilities on Shandong Hongchuang and Shenzhen Transsion 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 Shenzhen Transsion. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shandong Hongchuang and Shenzhen Transsion.
Diversification Opportunities for Shandong Hongchuang and Shenzhen Transsion
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Shandong and Shenzhen is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Shandong Hongchuang Aluminum and Shenzhen Transsion Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shenzhen Transsion 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 Shenzhen Transsion. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shenzhen Transsion has no effect on the direction of Shandong Hongchuang i.e., Shandong Hongchuang and Shenzhen Transsion go up and down completely randomly.
Pair Corralation between Shandong Hongchuang and Shenzhen Transsion
Assuming the 90 days trading horizon Shandong Hongchuang Aluminum is expected to generate 0.86 times more return on investment than Shenzhen Transsion. However, Shandong Hongchuang Aluminum is 1.16 times less risky than Shenzhen Transsion. It trades about 0.04 of its potential returns per unit of risk. Shenzhen Transsion Holdings is currently generating about 0.01 per unit of risk. If you would invest 720.00 in Shandong Hongchuang Aluminum on September 1, 2024 and sell it today you would earn a total of 12.00 from holding Shandong Hongchuang Aluminum or generate 1.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Shandong Hongchuang Aluminum vs. Shenzhen Transsion Holdings
Performance |
| Timeline |
| Shandong Hongchuang |
| Shenzhen Transsion |
Shandong Hongchuang and Shenzhen Transsion Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shandong Hongchuang and Shenzhen Transsion
The main advantage of trading using opposite Shandong Hongchuang and Shenzhen Transsion positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shandong Hongchuang position performs unexpectedly, Shenzhen Transsion 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 Transsion will offset losses from the drop in Shenzhen Transsion's long position.| Shandong Hongchuang vs. Dareway Software Co | Shandong Hongchuang vs. Anji Foodstuff Co | Shandong Hongchuang vs. Beijing Yanjing Brewery | Shandong Hongchuang vs. Yankershop Food Co |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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