Correlation Between Hubeiyichang Transportation and Tangshan Port
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By analyzing existing cross correlation between Hubeiyichang Transportation Group and Tangshan Port Group, you can compare the effects of market volatilities on Hubeiyichang Transportation and Tangshan Port 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 Tangshan Port. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hubeiyichang Transportation and Tangshan Port.
Diversification Opportunities for Hubeiyichang Transportation and Tangshan Port
0.39 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Hubeiyichang and Tangshan is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Hubeiyichang Transportation Gr and Tangshan Port Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tangshan Port Group 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 Tangshan Port. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tangshan Port Group has no effect on the direction of Hubeiyichang Transportation i.e., Hubeiyichang Transportation and Tangshan Port go up and down completely randomly.
Pair Corralation between Hubeiyichang Transportation and Tangshan Port
Assuming the 90 days trading horizon Hubeiyichang Transportation Group is expected to generate 1.05 times more return on investment than Tangshan Port. However, Hubeiyichang Transportation is 1.05 times more volatile than Tangshan Port Group. It trades about -0.12 of its potential returns per unit of risk. Tangshan Port Group is currently generating about -0.18 per unit of risk. If you would invest 524.00 in Hubeiyichang Transportation Group on October 25, 2024 and sell it today you would lose (26.00) from holding Hubeiyichang Transportation Group or give up 4.96% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Hubeiyichang Transportation Gr vs. Tangshan Port Group
Performance |
| Timeline |
| Hubeiyichang Transportation |
| Tangshan Port Group |
Hubeiyichang Transportation and Tangshan Port Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hubeiyichang Transportation and Tangshan Port
The main advantage of trading using opposite Hubeiyichang Transportation and Tangshan Port positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hubeiyichang Transportation position performs unexpectedly, Tangshan Port 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 Tangshan Port will offset losses from the drop in Tangshan Port's long position.The idea behind Hubeiyichang Transportation Group and Tangshan Port Group 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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