Correlation Between Shandong Polymer and Hongrun Construction
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By analyzing existing cross correlation between Shandong Polymer Biochemicals and Hongrun Construction Group, you can compare the effects of market volatilities on Shandong Polymer and Hongrun Construction 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 Hongrun Construction. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shandong Polymer and Hongrun Construction.
Diversification Opportunities for Shandong Polymer and Hongrun Construction
0.95 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Shandong and Hongrun is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Shandong Polymer Biochemicals and Hongrun Construction Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hongrun Construction 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 Hongrun Construction. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hongrun Construction has no effect on the direction of Shandong Polymer i.e., Shandong Polymer and Hongrun Construction go up and down completely randomly.
Pair Corralation between Shandong Polymer and Hongrun Construction
Assuming the 90 days trading horizon Shandong Polymer is expected to generate 4.64 times less return on investment than Hongrun Construction. But when comparing it to its historical volatility, Shandong Polymer Biochemicals is 1.09 times less risky than Hongrun Construction. It trades about 0.04 of its potential returns per unit of risk. Hongrun Construction Group is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest 470.00 in Hongrun Construction Group on September 14, 2024 and sell it today you would earn a total of 42.00 from holding Hongrun Construction Group or generate 8.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Shandong Polymer Biochemicals vs. Hongrun Construction Group
Performance |
| Timeline |
| Shandong Polymer Bio |
| Hongrun Construction |
Shandong Polymer and Hongrun Construction Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shandong Polymer and Hongrun Construction
The main advantage of trading using opposite Shandong Polymer and Hongrun Construction positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shandong Polymer position performs unexpectedly, Hongrun Construction 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 Hongrun Construction will offset losses from the drop in Hongrun Construction's long position.| Shandong Polymer vs. Eastern Communications Co | Shandong Polymer vs. Songz Automobile Air | Shandong Polymer vs. China National Software | Shandong Polymer vs. Iat Automobile 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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