Correlation Between Guangzhou Zhujiang and Hubei Dinglong
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By analyzing existing cross correlation between Guangzhou Zhujiang Brewery and Hubei Dinglong Chemical, you can compare the effects of market volatilities on Guangzhou Zhujiang and Hubei Dinglong 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 Guangzhou Zhujiang with a short position of Hubei Dinglong. Check out your portfolio center. Please also check ongoing floating volatility patterns of Guangzhou Zhujiang and Hubei Dinglong.
Diversification Opportunities for Guangzhou Zhujiang and Hubei Dinglong
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Guangzhou and Hubei is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Guangzhou Zhujiang Brewery and Hubei Dinglong Chemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hubei Dinglong Chemical and Guangzhou Zhujiang 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 Guangzhou Zhujiang Brewery are associated (or correlated) with Hubei Dinglong. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hubei Dinglong Chemical has no effect on the direction of Guangzhou Zhujiang i.e., Guangzhou Zhujiang and Hubei Dinglong go up and down completely randomly.
Pair Corralation between Guangzhou Zhujiang and Hubei Dinglong
Assuming the 90 days trading horizon Guangzhou Zhujiang is expected to generate 1.8 times less return on investment than Hubei Dinglong. But when comparing it to its historical volatility, Guangzhou Zhujiang Brewery is 1.56 times less risky than Hubei Dinglong. It trades about 0.06 of its potential returns per unit of risk. Hubei Dinglong Chemical is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 2,257 in Hubei Dinglong Chemical on August 31, 2024 and sell it today you would earn a total of 533.00 from holding Hubei Dinglong Chemical or generate 23.62% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Guangzhou Zhujiang Brewery vs. Hubei Dinglong Chemical
Performance |
| Timeline |
| Guangzhou Zhujiang |
| Hubei Dinglong Chemical |
Guangzhou Zhujiang and Hubei Dinglong Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Guangzhou Zhujiang and Hubei Dinglong
The main advantage of trading using opposite Guangzhou Zhujiang and Hubei Dinglong positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Guangzhou Zhujiang position performs unexpectedly, Hubei Dinglong 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 Hubei Dinglong will offset losses from the drop in Hubei Dinglong's long position.| Guangzhou Zhujiang vs. Lutian Machinery Co | Guangzhou Zhujiang vs. PetroChina Co Ltd | Guangzhou Zhujiang vs. Bank of China | Guangzhou Zhujiang vs. Gansu Jiu Steel |
| Hubei Dinglong vs. Dhc Software Co | Hubei Dinglong vs. 360 Security Technology | Hubei Dinglong vs. Vontron Technology Co | Hubei Dinglong vs. Northking Information Technology |
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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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