Correlation Between Hubeiyichang Transportation and Lingyuan Iron
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By analyzing existing cross correlation between Hubeiyichang Transportation Group and Lingyuan Iron Steel, you can compare the effects of market volatilities on Hubeiyichang Transportation and Lingyuan Iron 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 Lingyuan Iron. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hubeiyichang Transportation and Lingyuan Iron.
Diversification Opportunities for Hubeiyichang Transportation and Lingyuan Iron
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Hubeiyichang and Lingyuan is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Hubeiyichang Transportation Gr and Lingyuan Iron Steel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lingyuan Iron Steel 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 Lingyuan Iron. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lingyuan Iron Steel has no effect on the direction of Hubeiyichang Transportation i.e., Hubeiyichang Transportation and Lingyuan Iron go up and down completely randomly.
Pair Corralation between Hubeiyichang Transportation and Lingyuan Iron
Assuming the 90 days trading horizon Hubeiyichang Transportation Group is expected to generate 1.07 times more return on investment than Lingyuan Iron. However, Hubeiyichang Transportation is 1.07 times more volatile than Lingyuan Iron Steel. It trades about -0.52 of its potential returns per unit of risk. Lingyuan Iron Steel is currently generating about -0.62 per unit of risk. If you would invest 579.00 in Hubeiyichang Transportation Group on October 15, 2024 and sell it today you would lose (116.00) from holding Hubeiyichang Transportation Group or give up 20.03% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hubeiyichang Transportation Gr vs. Lingyuan Iron Steel
Performance |
| Timeline |
| Hubeiyichang Transportation |
| Lingyuan Iron Steel |
Hubeiyichang Transportation and Lingyuan Iron Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hubeiyichang Transportation and Lingyuan Iron
The main advantage of trading using opposite Hubeiyichang Transportation and Lingyuan Iron positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hubeiyichang Transportation position performs unexpectedly, Lingyuan Iron 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 Lingyuan Iron will offset losses from the drop in Lingyuan Iron's long position.The idea behind Hubeiyichang Transportation Group and Lingyuan Iron Steel 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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