Correlation Between Shandong Polymer and Xiandai Investment
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By analyzing existing cross correlation between Shandong Polymer Biochemicals and Xiandai Investment Co, you can compare the effects of market volatilities on Shandong Polymer and Xiandai Investment 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 Polymer with a short position of Xiandai Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shandong Polymer and Xiandai Investment.
Diversification Opportunities for Shandong Polymer and Xiandai Investment
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Shandong and Xiandai is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Shandong Polymer Biochemicals and Xiandai Investment Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xiandai Investment and Shandong Polymer 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 Polymer Biochemicals are associated (or correlated) with Xiandai Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xiandai Investment has no effect on the direction of Shandong Polymer i.e., Shandong Polymer and Xiandai Investment go up and down completely randomly.
Pair Corralation between Shandong Polymer and Xiandai Investment
Assuming the 90 days trading horizon Shandong Polymer is expected to generate 1.99 times less return on investment than Xiandai Investment. In addition to that, Shandong Polymer is 1.39 times more volatile than Xiandai Investment Co. It trades about 0.07 of its total potential returns per unit of risk. Xiandai Investment Co is currently generating about 0.2 per unit of volatility. If you would invest 414.00 in Xiandai Investment Co on September 3, 2024 and sell it today you would earn a total of 48.00 from holding Xiandai Investment Co or generate 11.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Shandong Polymer Biochemicals vs. Xiandai Investment Co
Performance |
| Timeline |
| Shandong Polymer Bio |
| Xiandai Investment |
Shandong Polymer and Xiandai Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shandong Polymer and Xiandai Investment
The main advantage of trading using opposite Shandong Polymer and Xiandai Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shandong Polymer position performs unexpectedly, Xiandai Investment 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 Xiandai Investment will offset losses from the drop in Xiandai Investment's long position.| Shandong Polymer vs. Zijin Mining Group | Shandong Polymer vs. Baoshan Iron Steel | Shandong Polymer vs. Rongsheng Petrochemical Co | Shandong Polymer vs. Hoshine Silicon Ind |
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