Correlation Between Shandong Mining and Wuhan Yangtze
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By analyzing existing cross correlation between Shandong Mining Machinery and Wuhan Yangtze Communication, you can compare the effects of market volatilities on Shandong Mining and Wuhan Yangtze 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 Wuhan Yangtze. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shandong Mining and Wuhan Yangtze.
Diversification Opportunities for Shandong Mining and Wuhan Yangtze
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Shandong and Wuhan is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Shandong Mining Machinery and Wuhan Yangtze Communication in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wuhan Yangtze Commun 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 Wuhan Yangtze. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wuhan Yangtze Commun has no effect on the direction of Shandong Mining i.e., Shandong Mining and Wuhan Yangtze go up and down completely randomly.
Pair Corralation between Shandong Mining and Wuhan Yangtze
Assuming the 90 days trading horizon Shandong Mining Machinery is expected to generate 0.87 times more return on investment than Wuhan Yangtze. However, Shandong Mining Machinery is 1.15 times less risky than Wuhan Yangtze. It trades about 0.08 of its potential returns per unit of risk. Wuhan Yangtze Communication is currently generating about 0.06 per unit of risk. If you would invest 218.00 in Shandong Mining Machinery on September 12, 2024 and sell it today you would earn a total of 346.00 from holding Shandong Mining Machinery or generate 158.72% 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. Wuhan Yangtze Communication
Performance |
| Timeline |
| Shandong Mining Machinery |
| Wuhan Yangtze Commun |
Shandong Mining and Wuhan Yangtze Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shandong Mining and Wuhan Yangtze
The main advantage of trading using opposite Shandong Mining and Wuhan Yangtze positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shandong Mining position performs unexpectedly, Wuhan Yangtze 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 Wuhan Yangtze will offset losses from the drop in Wuhan Yangtze'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 |
| Wuhan Yangtze vs. Gansu Jiu Steel | Wuhan Yangtze vs. Shandong Mining Machinery | Wuhan Yangtze vs. Aba Chemicals Corp | Wuhan Yangtze 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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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