Correlation Between Fujian Longzhou and Shanghai Construction
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By analyzing existing cross correlation between Fujian Longzhou Transportation and Shanghai Construction Group, you can compare the effects of market volatilities on Fujian Longzhou and Shanghai Construction 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 Fujian Longzhou with a short position of Shanghai Construction. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fujian Longzhou and Shanghai Construction.
Diversification Opportunities for Fujian Longzhou and Shanghai Construction
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Fujian and Shanghai is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Fujian Longzhou Transportation and Shanghai Construction Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shanghai Construction and Fujian Longzhou 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 Fujian Longzhou Transportation are associated (or correlated) with Shanghai Construction. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shanghai Construction has no effect on the direction of Fujian Longzhou i.e., Fujian Longzhou and Shanghai Construction go up and down completely randomly.
Pair Corralation between Fujian Longzhou and Shanghai Construction
Assuming the 90 days trading horizon Fujian Longzhou Transportation is expected to generate 1.37 times more return on investment than Shanghai Construction. However, Fujian Longzhou is 1.37 times more volatile than Shanghai Construction Group. It trades about 0.07 of its potential returns per unit of risk. Shanghai Construction Group is currently generating about 0.1 per unit of risk. If you would invest 404.00 in Fujian Longzhou Transportation on September 21, 2024 and sell it today you would earn a total of 90.00 from holding Fujian Longzhou Transportation or generate 22.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fujian Longzhou Transportation vs. Shanghai Construction Group
Performance |
| Timeline |
| Fujian Longzhou Tran |
| Shanghai Construction |
Fujian Longzhou and Shanghai Construction Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fujian Longzhou and Shanghai Construction
The main advantage of trading using opposite Fujian Longzhou and Shanghai Construction positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fujian Longzhou position performs unexpectedly, Shanghai Construction 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 Construction will offset losses from the drop in Shanghai Construction's long position.| Fujian Longzhou vs. New China Life | Fujian Longzhou vs. Ming Yang Smart | Fujian Longzhou vs. 159681 | Fujian Longzhou vs. 159005 |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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