Correlation Between Chengdu Xinzhu and Hubei Forbon
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By analyzing existing cross correlation between Chengdu Xinzhu RoadBridge and Hubei Forbon Technology, you can compare the effects of market volatilities on Chengdu Xinzhu 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 Chengdu Xinzhu with a short position of Hubei Forbon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chengdu Xinzhu and Hubei Forbon.
Diversification Opportunities for Chengdu Xinzhu and Hubei Forbon
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Chengdu and Hubei is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Chengdu Xinzhu RoadBridge 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 Chengdu Xinzhu 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 Chengdu Xinzhu RoadBridge 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 Chengdu Xinzhu i.e., Chengdu Xinzhu and Hubei Forbon go up and down completely randomly.
Pair Corralation between Chengdu Xinzhu and Hubei Forbon
Assuming the 90 days trading horizon Chengdu Xinzhu is expected to generate 1.69 times less return on investment than Hubei Forbon. But when comparing it to its historical volatility, Chengdu Xinzhu RoadBridge is 1.01 times less risky than Hubei Forbon. It trades about 0.01 of its potential returns per unit of risk. Hubei Forbon Technology is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 703.00 in Hubei Forbon Technology on October 16, 2024 and sell it today you would earn a total of 80.00 from holding Hubei Forbon Technology or generate 11.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Chengdu Xinzhu RoadBridge vs. Hubei Forbon Technology
Performance |
| Timeline |
| Chengdu Xinzhu RoadBridge |
| Hubei Forbon Technology |
Chengdu Xinzhu and Hubei Forbon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chengdu Xinzhu and Hubei Forbon
The main advantage of trading using opposite Chengdu Xinzhu and Hubei Forbon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chengdu Xinzhu 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.| Chengdu Xinzhu vs. Fujian Oriental Silver | Chengdu Xinzhu vs. Xinjiang Baodi Mining | Chengdu Xinzhu vs. Shenzhen Silver Basis | Chengdu Xinzhu vs. Wuhan Hvsen Biotechnology |
| Hubei Forbon vs. UE Furniture Co | Hubei Forbon vs. Shandong Publishing Media | Hubei Forbon vs. Zoy Home Furnishing | Hubei Forbon vs. Heilongjiang Publishing Media |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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