Correlation Between Hubeiyichang Transportation and Yingde Greatchem
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By analyzing existing cross correlation between Hubeiyichang Transportation Group and Yingde Greatchem Chemicals, you can compare the effects of market volatilities on Hubeiyichang Transportation and Yingde Greatchem 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 Hubeiyichang Transportation with a short position of Yingde Greatchem. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hubeiyichang Transportation and Yingde Greatchem.
Diversification Opportunities for Hubeiyichang Transportation and Yingde Greatchem
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Hubeiyichang and Yingde is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Hubeiyichang Transportation Gr and Yingde Greatchem Chemicals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Yingde Greatchem Che and Hubeiyichang Transportation 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 Hubeiyichang Transportation Group are associated (or correlated) with Yingde Greatchem. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Yingde Greatchem Che has no effect on the direction of Hubeiyichang Transportation i.e., Hubeiyichang Transportation and Yingde Greatchem go up and down completely randomly.
Pair Corralation between Hubeiyichang Transportation and Yingde Greatchem
Assuming the 90 days trading horizon Hubeiyichang Transportation is expected to generate 3.48 times less return on investment than Yingde Greatchem. But when comparing it to its historical volatility, Hubeiyichang Transportation Group is 1.26 times less risky than Yingde Greatchem. It trades about 0.01 of its potential returns per unit of risk. Yingde Greatchem Chemicals is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 2,298 in Yingde Greatchem Chemicals on October 30, 2024 and sell it today you would earn a total of 27.00 from holding Yingde Greatchem Chemicals or generate 1.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hubeiyichang Transportation Gr vs. Yingde Greatchem Chemicals
Performance |
| Timeline |
| Hubeiyichang Transportation |
| Yingde Greatchem Che |
Hubeiyichang Transportation and Yingde Greatchem Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hubeiyichang Transportation and Yingde Greatchem
The main advantage of trading using opposite Hubeiyichang Transportation and Yingde Greatchem positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hubeiyichang Transportation position performs unexpectedly, Yingde Greatchem 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 Yingde Greatchem will offset losses from the drop in Yingde Greatchem's long position.The idea behind Hubeiyichang Transportation Group and Yingde Greatchem Chemicals 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.
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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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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