Correlation Between Fujian Longzhou and Shanghai Ziyan
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By analyzing existing cross correlation between Fujian Longzhou Transportation and Shanghai Ziyan Foods, you can compare the effects of market volatilities on Fujian Longzhou and Shanghai Ziyan 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 Ziyan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fujian Longzhou and Shanghai Ziyan.
Diversification Opportunities for Fujian Longzhou and Shanghai Ziyan
0.36 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Fujian and Shanghai is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Fujian Longzhou Transportation and Shanghai Ziyan Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shanghai Ziyan Foods 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 Ziyan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shanghai Ziyan Foods has no effect on the direction of Fujian Longzhou i.e., Fujian Longzhou and Shanghai Ziyan go up and down completely randomly.
Pair Corralation between Fujian Longzhou and Shanghai Ziyan
Assuming the 90 days trading horizon Fujian Longzhou Transportation is expected to under-perform the Shanghai Ziyan. But the stock apears to be less risky and, when comparing its historical volatility, Fujian Longzhou Transportation is 1.41 times less risky than Shanghai Ziyan. The stock trades about -0.27 of its potential returns per unit of risk. The Shanghai Ziyan Foods is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest 1,787 in Shanghai Ziyan Foods on October 18, 2024 and sell it today you would lose (38.00) from holding Shanghai Ziyan Foods or give up 2.13% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fujian Longzhou Transportation vs. Shanghai Ziyan Foods
Performance |
| Timeline |
| Fujian Longzhou Tran |
| Shanghai Ziyan Foods |
Fujian Longzhou and Shanghai Ziyan Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fujian Longzhou and Shanghai Ziyan
The main advantage of trading using opposite Fujian Longzhou and Shanghai Ziyan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fujian Longzhou position performs unexpectedly, Shanghai Ziyan 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 Ziyan will offset losses from the drop in Shanghai Ziyan's long position.The idea behind Fujian Longzhou Transportation and Shanghai Ziyan Foods 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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