Correlation Between Shandong Longquan and Techshine Electronics
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By analyzing existing cross correlation between Shandong Longquan Pipeline and Techshine Electronics Co, you can compare the effects of market volatilities on Shandong Longquan and Techshine Electronics 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 Techshine Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shandong Longquan and Techshine Electronics.
Diversification Opportunities for Shandong Longquan and Techshine Electronics
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Shandong and Techshine is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Shandong Longquan Pipeline and Techshine Electronics Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Techshine Electronics 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 Techshine Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Techshine Electronics has no effect on the direction of Shandong Longquan i.e., Shandong Longquan and Techshine Electronics go up and down completely randomly.
Pair Corralation between Shandong Longquan and Techshine Electronics
Assuming the 90 days trading horizon Shandong Longquan is expected to generate 1.9 times less return on investment than Techshine Electronics. But when comparing it to its historical volatility, Shandong Longquan Pipeline is 1.19 times less risky than Techshine Electronics. It trades about 0.01 of its potential returns per unit of risk. Techshine Electronics Co is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 1,970 in Techshine Electronics Co on November 4, 2024 and sell it today you would earn a total of 129.00 from holding Techshine Electronics Co or generate 6.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Shandong Longquan Pipeline vs. Techshine Electronics Co
Performance |
| Timeline |
| Shandong Longquan |
| Techshine Electronics |
Shandong Longquan and Techshine Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shandong Longquan and Techshine Electronics
The main advantage of trading using opposite Shandong Longquan and Techshine Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shandong Longquan position performs unexpectedly, Techshine Electronics 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 Techshine Electronics will offset losses from the drop in Techshine Electronics' long position.The idea behind Shandong Longquan Pipeline and Techshine Electronics 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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