Correlation Between Shandong Polymer and Hubei Forbon
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By analyzing existing cross correlation between Shandong Polymer Biochemicals and Hubei Forbon Technology, you can compare the effects of market volatilities on Shandong Polymer and Hubei Forbon 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 Hubei Forbon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shandong Polymer and Hubei Forbon.
Diversification Opportunities for Shandong Polymer and Hubei Forbon
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Shandong and Hubei is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Shandong Polymer Biochemicals and Hubei Forbon Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hubei Forbon Technology 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 Hubei Forbon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hubei Forbon Technology has no effect on the direction of Shandong Polymer i.e., Shandong Polymer and Hubei Forbon go up and down completely randomly.
Pair Corralation between Shandong Polymer and Hubei Forbon
Assuming the 90 days trading horizon Shandong Polymer is expected to generate 2.11 times less return on investment than Hubei Forbon. In addition to that, Shandong Polymer is 1.01 times more volatile than Hubei Forbon Technology. It trades about 0.11 of its total potential returns per unit of risk. Hubei Forbon Technology is currently generating about 0.23 per unit of volatility. If you would invest 776.00 in Hubei Forbon Technology on September 4, 2024 and sell it today you would earn a total of 151.00 from holding Hubei Forbon Technology or generate 19.46% 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. Hubei Forbon Technology
Performance |
| Timeline |
| Shandong Polymer Bio |
| Hubei Forbon Technology |
Shandong Polymer and Hubei Forbon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shandong Polymer and Hubei Forbon
The main advantage of trading using opposite Shandong Polymer and Hubei Forbon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shandong Polymer position performs unexpectedly, Hubei Forbon 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 Forbon will offset losses from the drop in Hubei Forbon's long position.| Shandong Polymer vs. Zijin Mining Group | Shandong Polymer vs. Wanhua Chemical Group | Shandong Polymer vs. Baoshan Iron Steel | Shandong Polymer vs. Rongsheng Petrochemical Co |
| Hubei Forbon vs. Zijin Mining Group | Hubei Forbon vs. Wanhua Chemical Group | Hubei Forbon vs. Baoshan Iron Steel | Hubei Forbon vs. Rongsheng Petrochemical 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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