Correlation Between Anhui Huilong and Guangdong Transtek
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By analyzing existing cross correlation between Anhui Huilong Agricultural and Guangdong Transtek Medical, you can compare the effects of market volatilities on Anhui Huilong and Guangdong Transtek 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 Anhui Huilong with a short position of Guangdong Transtek. Check out your portfolio center. Please also check ongoing floating volatility patterns of Anhui Huilong and Guangdong Transtek.
Diversification Opportunities for Anhui Huilong and Guangdong Transtek
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Anhui and Guangdong is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Anhui Huilong Agricultural and Guangdong Transtek Medical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guangdong Transtek and Anhui Huilong 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 Anhui Huilong Agricultural are associated (or correlated) with Guangdong Transtek. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guangdong Transtek has no effect on the direction of Anhui Huilong i.e., Anhui Huilong and Guangdong Transtek go up and down completely randomly.
Pair Corralation between Anhui Huilong and Guangdong Transtek
Assuming the 90 days trading horizon Anhui Huilong is expected to generate 1.11 times less return on investment than Guangdong Transtek. But when comparing it to its historical volatility, Anhui Huilong Agricultural is 2.11 times less risky than Guangdong Transtek. It trades about 0.15 of its potential returns per unit of risk. Guangdong Transtek Medical is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 1,333 in Guangdong Transtek Medical on November 8, 2024 and sell it today you would earn a total of 43.00 from holding Guangdong Transtek Medical or generate 3.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Anhui Huilong Agricultural vs. Guangdong Transtek Medical
Performance |
| Timeline |
| Anhui Huilong Agricu |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Guangdong Transtek |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Weak
Anhui Huilong and Guangdong Transtek Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Anhui Huilong and Guangdong Transtek
The main advantage of trading using opposite Anhui Huilong and Guangdong Transtek positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Anhui Huilong position performs unexpectedly, Guangdong Transtek 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 Guangdong Transtek will offset losses from the drop in Guangdong Transtek's long position.The idea behind Anhui Huilong Agricultural and Guangdong Transtek Medical pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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