Correlation Between Hubeiyichang Transportation and Shanghai Broadband
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By analyzing existing cross correlation between Hubeiyichang Transportation Group and Shanghai Broadband Technology, you can compare the effects of market volatilities on Hubeiyichang Transportation and Shanghai Broadband 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 Shanghai Broadband. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hubeiyichang Transportation and Shanghai Broadband.
Diversification Opportunities for Hubeiyichang Transportation and Shanghai Broadband
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Hubeiyichang and Shanghai is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Hubeiyichang Transportation Gr and Shanghai Broadband Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shanghai Broadband 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 Shanghai Broadband. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shanghai Broadband has no effect on the direction of Hubeiyichang Transportation i.e., Hubeiyichang Transportation and Shanghai Broadband go up and down completely randomly.
Pair Corralation between Hubeiyichang Transportation and Shanghai Broadband
Assuming the 90 days trading horizon Hubeiyichang Transportation is expected to generate 1.74 times less return on investment than Shanghai Broadband. But when comparing it to its historical volatility, Hubeiyichang Transportation Group is 1.19 times less risky than Shanghai Broadband. It trades about 0.17 of its potential returns per unit of risk. Shanghai Broadband Technology is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest 271.00 in Shanghai Broadband Technology on September 12, 2024 and sell it today you would earn a total of 114.00 from holding Shanghai Broadband Technology or generate 42.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 98.28% |
| Values | Daily Returns |
Hubeiyichang Transportation Gr vs. Shanghai Broadband Technology
Performance |
| Timeline |
| Hubeiyichang Transportation |
| Shanghai Broadband |
Hubeiyichang Transportation and Shanghai Broadband Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hubeiyichang Transportation and Shanghai Broadband
The main advantage of trading using opposite Hubeiyichang Transportation and Shanghai Broadband positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hubeiyichang Transportation position performs unexpectedly, Shanghai Broadband 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 Shanghai Broadband will offset losses from the drop in Shanghai Broadband's long position.The idea behind Hubeiyichang Transportation Group and Shanghai Broadband 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.
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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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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