Correlation Between Shandong Longquan and Xingguang Agricultural
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By analyzing existing cross correlation between Shandong Longquan Pipeline and Xingguang Agricultural Mach, you can compare the effects of market volatilities on Shandong Longquan and Xingguang Agricultural 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 Xingguang Agricultural. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shandong Longquan and Xingguang Agricultural.
Diversification Opportunities for Shandong Longquan and Xingguang Agricultural
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Shandong and Xingguang is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Shandong Longquan Pipeline and Xingguang Agricultural Mach in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xingguang Agricultural 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 Xingguang Agricultural. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xingguang Agricultural has no effect on the direction of Shandong Longquan i.e., Shandong Longquan and Xingguang Agricultural go up and down completely randomly.
Pair Corralation between Shandong Longquan and Xingguang Agricultural
Assuming the 90 days trading horizon Shandong Longquan is expected to generate 1.78 times less return on investment than Xingguang Agricultural. But when comparing it to its historical volatility, Shandong Longquan Pipeline is 1.28 times less risky than Xingguang Agricultural. It trades about 0.01 of its potential returns per unit of risk. Xingguang Agricultural Mach is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 908.00 in Xingguang Agricultural Mach on November 27, 2024 and sell it today you would lose (42.00) from holding Xingguang Agricultural Mach or give up 4.63% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Shandong Longquan Pipeline vs. Xingguang Agricultural Mach
Performance |
| Timeline |
| Shandong Longquan |
| Xingguang Agricultural |
Shandong Longquan and Xingguang Agricultural Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shandong Longquan and Xingguang Agricultural
The main advantage of trading using opposite Shandong Longquan and Xingguang Agricultural positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shandong Longquan position performs unexpectedly, Xingguang Agricultural 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 Xingguang Agricultural will offset losses from the drop in Xingguang Agricultural's long position.| Shandong Longquan vs. Jiangsu Yanghe Brewery | Shandong Longquan vs. Financial Street Holdings | Shandong Longquan vs. Beijing Yanjing Brewery | Shandong Longquan vs. Bohai Leasing Co |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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