Correlation Between Shandong Polymer and Sichuan Fulin
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By analyzing existing cross correlation between Shandong Polymer Biochemicals and Sichuan Fulin Transportation, you can compare the effects of market volatilities on Shandong Polymer and Sichuan Fulin 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 Sichuan Fulin. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shandong Polymer and Sichuan Fulin.
Diversification Opportunities for Shandong Polymer and Sichuan Fulin
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Shandong and Sichuan is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Shandong Polymer Biochemicals and Sichuan Fulin Transportation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sichuan Fulin Transp 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 Sichuan Fulin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sichuan Fulin Transp has no effect on the direction of Shandong Polymer i.e., Shandong Polymer and Sichuan Fulin go up and down completely randomly.
Pair Corralation between Shandong Polymer and Sichuan Fulin
Assuming the 90 days trading horizon Shandong Polymer is expected to generate 1.81 times less return on investment than Sichuan Fulin. In addition to that, Shandong Polymer is 1.69 times more volatile than Sichuan Fulin Transportation. It trades about 0.07 of its total potential returns per unit of risk. Sichuan Fulin Transportation is currently generating about 0.21 per unit of volatility. If you would invest 627.00 in Sichuan Fulin Transportation on August 29, 2024 and sell it today you would earn a total of 69.00 from holding Sichuan Fulin Transportation or generate 11.0% 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. Sichuan Fulin Transportation
Performance |
| Timeline |
| Shandong Polymer Bio |
| Sichuan Fulin Transp |
Shandong Polymer and Sichuan Fulin Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shandong Polymer and Sichuan Fulin
The main advantage of trading using opposite Shandong Polymer and Sichuan Fulin positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shandong Polymer position performs unexpectedly, Sichuan Fulin 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 Sichuan Fulin will offset losses from the drop in Sichuan Fulin's long position.| Shandong Polymer vs. Zijin Mining Group | Shandong Polymer vs. Wanhua Chemical Group | Shandong Polymer vs. Baoshan Iron Steel | Shandong Polymer vs. Shandong Gold Mining |
| Sichuan Fulin vs. Cambricon Technologies Corp | Sichuan Fulin vs. Loongson Technology Corp | Sichuan Fulin vs. Chongqing Road Bridge | Sichuan Fulin vs. Shenzhen Fortune Trend |
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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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