Correlation Between Shandong Polymer and Kangyue Technology
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By analyzing existing cross correlation between Shandong Polymer Biochemicals and Kangyue Technology Co, you can compare the effects of market volatilities on Shandong Polymer and Kangyue Technology 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 Kangyue Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shandong Polymer and Kangyue Technology.
Diversification Opportunities for Shandong Polymer and Kangyue Technology
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Shandong and Kangyue is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Shandong Polymer Biochemicals and Kangyue Technology Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kangyue 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 Kangyue Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kangyue Technology has no effect on the direction of Shandong Polymer i.e., Shandong Polymer and Kangyue Technology go up and down completely randomly.
Pair Corralation between Shandong Polymer and Kangyue Technology
Assuming the 90 days trading horizon Shandong Polymer Biochemicals is expected to generate 0.52 times more return on investment than Kangyue Technology. However, Shandong Polymer Biochemicals is 1.93 times less risky than Kangyue Technology. It trades about 0.03 of its potential returns per unit of risk. Kangyue Technology Co is currently generating about 0.01 per unit of risk. If you would invest 390.00 in Shandong Polymer Biochemicals on October 14, 2024 and sell it today you would earn a total of 11.00 from holding Shandong Polymer Biochemicals or generate 2.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Shandong Polymer Biochemicals vs. Kangyue Technology Co
Performance |
| Timeline |
| Shandong Polymer Bio |
| Kangyue Technology |
Shandong Polymer and Kangyue Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shandong Polymer and Kangyue Technology
The main advantage of trading using opposite Shandong Polymer and Kangyue Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shandong Polymer position performs unexpectedly, Kangyue Technology 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 Kangyue Technology will offset losses from the drop in Kangyue Technology's long position.The idea behind Shandong Polymer Biochemicals and Kangyue Technology Co pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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