Correlation Between Hubeiyichang Transportation and Hengli Petrochemical
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By analyzing existing cross correlation between Hubeiyichang Transportation Group and Hengli Petrochemical Co, you can compare the effects of market volatilities on Hubeiyichang Transportation and Hengli Petrochemical 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 Hengli Petrochemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hubeiyichang Transportation and Hengli Petrochemical.
Diversification Opportunities for Hubeiyichang Transportation and Hengli Petrochemical
0.16 | Correlation Coefficient |
Average diversification
The 3 months correlation between Hubeiyichang and Hengli is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Hubeiyichang Transportation Gr and Hengli Petrochemical Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hengli Petrochemical 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 Hengli Petrochemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hengli Petrochemical has no effect on the direction of Hubeiyichang Transportation i.e., Hubeiyichang Transportation and Hengli Petrochemical go up and down completely randomly.
Pair Corralation between Hubeiyichang Transportation and Hengli Petrochemical
Assuming the 90 days trading horizon Hubeiyichang Transportation Group is expected to generate 1.01 times more return on investment than Hengli Petrochemical. However, Hubeiyichang Transportation is 1.01 times more volatile than Hengli Petrochemical Co. It trades about -0.01 of its potential returns per unit of risk. Hengli Petrochemical Co is currently generating about -0.01 per unit of risk. If you would invest 521.00 in Hubeiyichang Transportation Group on October 15, 2024 and sell it today you would lose (58.00) from holding Hubeiyichang Transportation Group or give up 11.13% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hubeiyichang Transportation Gr vs. Hengli Petrochemical Co
Performance |
| Timeline |
| Hubeiyichang Transportation |
| Hengli Petrochemical |
Hubeiyichang Transportation and Hengli Petrochemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hubeiyichang Transportation and Hengli Petrochemical
The main advantage of trading using opposite Hubeiyichang Transportation and Hengli Petrochemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hubeiyichang Transportation position performs unexpectedly, Hengli Petrochemical 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 Hengli Petrochemical will offset losses from the drop in Hengli Petrochemical's long position.The idea behind Hubeiyichang Transportation Group and Hengli Petrochemical Co 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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