Correlation Between Shandong Mining and Tongyu Communication
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By analyzing existing cross correlation between Shandong Mining Machinery and Tongyu Communication, you can compare the effects of market volatilities on Shandong Mining and Tongyu Communication 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 Mining with a short position of Tongyu Communication. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shandong Mining and Tongyu Communication.
Diversification Opportunities for Shandong Mining and Tongyu Communication
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Shandong and Tongyu is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Shandong Mining Machinery and Tongyu Communication in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tongyu Communication and Shandong Mining 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 Mining Machinery are associated (or correlated) with Tongyu Communication. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tongyu Communication has no effect on the direction of Shandong Mining i.e., Shandong Mining and Tongyu Communication go up and down completely randomly.
Pair Corralation between Shandong Mining and Tongyu Communication
Assuming the 90 days trading horizon Shandong Mining Machinery is expected to generate 0.88 times more return on investment than Tongyu Communication. However, Shandong Mining Machinery is 1.14 times less risky than Tongyu Communication. It trades about 0.08 of its potential returns per unit of risk. Tongyu Communication is currently generating about 0.05 per unit of risk. If you would invest 272.00 in Shandong Mining Machinery on September 12, 2024 and sell it today you would earn a total of 292.00 from holding Shandong Mining Machinery or generate 107.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Shandong Mining Machinery vs. Tongyu Communication
Performance |
| Timeline |
| Shandong Mining Machinery |
| Tongyu Communication |
Shandong Mining and Tongyu Communication Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shandong Mining and Tongyu Communication
The main advantage of trading using opposite Shandong Mining and Tongyu Communication positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shandong Mining position performs unexpectedly, Tongyu Communication 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 Tongyu Communication will offset losses from the drop in Tongyu Communication's long position.| Shandong Mining vs. Agricultural Bank of | Shandong Mining vs. Industrial and Commercial | Shandong Mining vs. Bank of China | Shandong Mining vs. PetroChina Co Ltd |
| Tongyu Communication vs. Gansu Jiu Steel | Tongyu Communication vs. Shandong Mining Machinery | Tongyu Communication vs. Aba Chemicals Corp | Tongyu Communication vs. BlueFocus Communication Group |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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