Correlation Between Shandong Mining and Shanxi Lanhua
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By analyzing existing cross correlation between Shandong Mining Machinery and Shanxi Lanhua Sci Tech, you can compare the effects of market volatilities on Shandong Mining and Shanxi Lanhua 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 Shanxi Lanhua. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shandong Mining and Shanxi Lanhua.
Diversification Opportunities for Shandong Mining and Shanxi Lanhua
0.3 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Shandong and Shanxi is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Shandong Mining Machinery and Shanxi Lanhua Sci Tech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shanxi Lanhua Sci 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 Shanxi Lanhua. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shanxi Lanhua Sci has no effect on the direction of Shandong Mining i.e., Shandong Mining and Shanxi Lanhua go up and down completely randomly.
Pair Corralation between Shandong Mining and Shanxi Lanhua
Assuming the 90 days trading horizon Shandong Mining Machinery is expected to generate 3.15 times more return on investment than Shanxi Lanhua. However, Shandong Mining is 3.15 times more volatile than Shanxi Lanhua Sci Tech. It trades about 0.37 of its potential returns per unit of risk. Shanxi Lanhua Sci Tech is currently generating about 0.11 per unit of risk. If you would invest 302.00 in Shandong Mining Machinery on September 12, 2024 and sell it today you would earn a total of 206.00 from holding Shandong Mining Machinery or generate 68.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Shandong Mining Machinery vs. Shanxi Lanhua Sci Tech
Performance |
| Timeline |
| Shandong Mining Machinery |
| Shanxi Lanhua Sci |
Shandong Mining and Shanxi Lanhua Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shandong Mining and Shanxi Lanhua
The main advantage of trading using opposite Shandong Mining and Shanxi Lanhua positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shandong Mining position performs unexpectedly, Shanxi Lanhua 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 Shanxi Lanhua will offset losses from the drop in Shanxi Lanhua'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 |
| Shanxi Lanhua vs. Gansu Jiu Steel | Shanxi Lanhua vs. Shandong Mining Machinery | Shanxi Lanhua vs. Aba Chemicals Corp | Shanxi Lanhua 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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