Correlation Between Shandong Longquan and XinJiang GuoTong
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By analyzing existing cross correlation between Shandong Longquan Pipeline and XinJiang GuoTong Pipeline, you can compare the effects of market volatilities on Shandong Longquan and XinJiang GuoTong 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 Shandong Longquan with a short position of XinJiang GuoTong. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shandong Longquan and XinJiang GuoTong.
Diversification Opportunities for Shandong Longquan and XinJiang GuoTong
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Shandong and XinJiang is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Shandong Longquan Pipeline and XinJiang GuoTong Pipeline in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on XinJiang GuoTong Pipeline and Shandong Longquan 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 Shandong Longquan Pipeline are associated (or correlated) with XinJiang GuoTong. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of XinJiang GuoTong Pipeline has no effect on the direction of Shandong Longquan i.e., Shandong Longquan and XinJiang GuoTong go up and down completely randomly.
Pair Corralation between Shandong Longquan and XinJiang GuoTong
Assuming the 90 days trading horizon Shandong Longquan Pipeline is expected to generate 0.53 times more return on investment than XinJiang GuoTong. However, Shandong Longquan Pipeline is 1.9 times less risky than XinJiang GuoTong. It trades about 0.41 of its potential returns per unit of risk. XinJiang GuoTong Pipeline is currently generating about 0.06 per unit of risk. If you would invest 431.00 in Shandong Longquan Pipeline on November 4, 2024 and sell it today you would earn a total of 43.00 from holding Shandong Longquan Pipeline or generate 9.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Shandong Longquan Pipeline vs. XinJiang GuoTong Pipeline
Performance |
| Timeline |
| Shandong Longquan |
| XinJiang GuoTong Pipeline |
Shandong Longquan and XinJiang GuoTong Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shandong Longquan and XinJiang GuoTong
The main advantage of trading using opposite Shandong Longquan and XinJiang GuoTong positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shandong Longquan position performs unexpectedly, XinJiang GuoTong 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 XinJiang GuoTong will offset losses from the drop in XinJiang GuoTong's long position.The idea behind Shandong Longquan Pipeline and XinJiang GuoTong Pipeline 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 Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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