Correlation Between Hubeiyichang Transportation and Shanghai Jinfeng
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By analyzing existing cross correlation between Hubeiyichang Transportation Group and Shanghai Jinfeng Wine, you can compare the effects of market volatilities on Hubeiyichang Transportation and Shanghai Jinfeng 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 Jinfeng. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hubeiyichang Transportation and Shanghai Jinfeng.
Diversification Opportunities for Hubeiyichang Transportation and Shanghai Jinfeng
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Hubeiyichang and Shanghai is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Hubeiyichang Transportation Gr and Shanghai Jinfeng Wine in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shanghai Jinfeng Wine 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 Jinfeng. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shanghai Jinfeng Wine has no effect on the direction of Hubeiyichang Transportation i.e., Hubeiyichang Transportation and Shanghai Jinfeng go up and down completely randomly.
Pair Corralation between Hubeiyichang Transportation and Shanghai Jinfeng
Assuming the 90 days trading horizon Hubeiyichang Transportation is expected to generate 1.97 times less return on investment than Shanghai Jinfeng. But when comparing it to its historical volatility, Hubeiyichang Transportation Group is 1.46 times less risky than Shanghai Jinfeng. It trades about 0.17 of its potential returns per unit of risk. Shanghai Jinfeng Wine is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest 447.00 in Shanghai Jinfeng Wine on September 12, 2024 and sell it today you would earn a total of 214.00 from holding Shanghai Jinfeng Wine or generate 47.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 98.28% |
| Values | Daily Returns |
Hubeiyichang Transportation Gr vs. Shanghai Jinfeng Wine
Performance |
| Timeline |
| Hubeiyichang Transportation |
| Shanghai Jinfeng Wine |
Hubeiyichang Transportation and Shanghai Jinfeng Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hubeiyichang Transportation and Shanghai Jinfeng
The main advantage of trading using opposite Hubeiyichang Transportation and Shanghai Jinfeng positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hubeiyichang Transportation position performs unexpectedly, Shanghai Jinfeng 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 Jinfeng will offset losses from the drop in Shanghai Jinfeng's long position.The idea behind Hubeiyichang Transportation Group and Shanghai Jinfeng Wine 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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