Correlation Between Shandong Mining and Shanghai Shuixing
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By analyzing existing cross correlation between Shandong Mining Machinery and Shanghai Shuixing Home, you can compare the effects of market volatilities on Shandong Mining and Shanghai Shuixing 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 Shanghai Shuixing. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shandong Mining and Shanghai Shuixing.
Diversification Opportunities for Shandong Mining and Shanghai Shuixing
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Shandong and Shanghai is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Shandong Mining Machinery and Shanghai Shuixing Home in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shanghai Shuixing Home 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 Shanghai Shuixing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shanghai Shuixing Home has no effect on the direction of Shandong Mining i.e., Shandong Mining and Shanghai Shuixing go up and down completely randomly.
Pair Corralation between Shandong Mining and Shanghai Shuixing
Assuming the 90 days trading horizon Shandong Mining Machinery is expected to generate 2.06 times more return on investment than Shanghai Shuixing. However, Shandong Mining is 2.06 times more volatile than Shanghai Shuixing Home. It trades about 0.4 of its potential returns per unit of risk. Shanghai Shuixing Home is currently generating about 0.25 per unit of risk. If you would invest 294.00 in Shandong Mining Machinery on September 13, 2024 and sell it today you would earn a total of 214.00 from holding Shandong Mining Machinery or generate 72.79% 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. Shanghai Shuixing Home
Performance |
| Timeline |
| Shandong Mining Machinery |
| Shanghai Shuixing Home |
Shandong Mining and Shanghai Shuixing Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shandong Mining and Shanghai Shuixing
The main advantage of trading using opposite Shandong Mining and Shanghai Shuixing positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shandong Mining position performs unexpectedly, Shanghai Shuixing 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 Shanghai Shuixing will offset losses from the drop in Shanghai Shuixing's long position.| Shandong Mining vs. China Petroleum Chemical | Shandong Mining vs. PetroChina Co Ltd | Shandong Mining vs. China State Construction | Shandong Mining vs. China Railway Group |
| Shanghai Shuixing vs. Nanjing Putian Telecommunications | Shanghai Shuixing vs. Tianjin Realty Development | Shanghai Shuixing vs. Kangyue Technology Co | Shanghai Shuixing vs. Shenzhen Hifuture Electric |
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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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