Correlation Between Jiangxi Hengda and Suzhou Mingzhi
Specify exactly 2 symbols:
By analyzing existing cross correlation between Jiangxi Hengda Hi Tech and Suzhou Mingzhi Technology, you can compare the effects of market volatilities on Jiangxi Hengda and Suzhou Mingzhi 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 Jiangxi Hengda with a short position of Suzhou Mingzhi. Check out your portfolio center. Please also check ongoing floating volatility patterns of Jiangxi Hengda and Suzhou Mingzhi.
Diversification Opportunities for Jiangxi Hengda and Suzhou Mingzhi
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Jiangxi and Suzhou is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Jiangxi Hengda Hi Tech and Suzhou Mingzhi Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Suzhou Mingzhi Technology and Jiangxi Hengda 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 Jiangxi Hengda Hi Tech are associated (or correlated) with Suzhou Mingzhi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Suzhou Mingzhi Technology has no effect on the direction of Jiangxi Hengda i.e., Jiangxi Hengda and Suzhou Mingzhi go up and down completely randomly.
Pair Corralation between Jiangxi Hengda and Suzhou Mingzhi
Assuming the 90 days trading horizon Jiangxi Hengda is expected to generate 2.6 times less return on investment than Suzhou Mingzhi. In addition to that, Jiangxi Hengda is 1.51 times more volatile than Suzhou Mingzhi Technology. It trades about 0.09 of its total potential returns per unit of risk. Suzhou Mingzhi Technology is currently generating about 0.33 per unit of volatility. If you would invest 1,630 in Suzhou Mingzhi Technology on November 8, 2024 and sell it today you would earn a total of 179.00 from holding Suzhou Mingzhi Technology or generate 10.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Jiangxi Hengda Hi Tech vs. Suzhou Mingzhi Technology
Performance |
| Timeline |
| Jiangxi Hengda Hi |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Suzhou Mingzhi Technology |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Jiangxi Hengda and Suzhou Mingzhi Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Jiangxi Hengda and Suzhou Mingzhi
The main advantage of trading using opposite Jiangxi Hengda and Suzhou Mingzhi positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Jiangxi Hengda position performs unexpectedly, Suzhou Mingzhi 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 Suzhou Mingzhi will offset losses from the drop in Suzhou Mingzhi's long position.The idea behind Jiangxi Hengda Hi Tech and Suzhou Mingzhi Technology 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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