Correlation Between Fujian Longzhou and Shanghai Rightongene
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By analyzing existing cross correlation between Fujian Longzhou Transportation and Shanghai Rightongene Biotechnology, you can compare the effects of market volatilities on Fujian Longzhou and Shanghai Rightongene 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 Rightongene. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fujian Longzhou and Shanghai Rightongene.
Diversification Opportunities for Fujian Longzhou and Shanghai Rightongene
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Fujian and Shanghai is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Fujian Longzhou Transportation and Shanghai Rightongene Biotechno in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shanghai Rightongene 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 Rightongene. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shanghai Rightongene has no effect on the direction of Fujian Longzhou i.e., Fujian Longzhou and Shanghai Rightongene go up and down completely randomly.
Pair Corralation between Fujian Longzhou and Shanghai Rightongene
Assuming the 90 days trading horizon Fujian Longzhou is expected to generate 3.22 times less return on investment than Shanghai Rightongene. In addition to that, Fujian Longzhou is 1.43 times more volatile than Shanghai Rightongene Biotechnology. It trades about 0.08 of its total potential returns per unit of risk. Shanghai Rightongene Biotechnology is currently generating about 0.36 per unit of volatility. If you would invest 1,751 in Shanghai Rightongene Biotechnology on November 7, 2024 and sell it today you would earn a total of 208.00 from holding Shanghai Rightongene Biotechnology or generate 11.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fujian Longzhou Transportation vs. Shanghai Rightongene Biotechno
Performance |
| Timeline |
| Fujian Longzhou Tran |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Shanghai Rightongene |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Weak
Fujian Longzhou and Shanghai Rightongene Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fujian Longzhou and Shanghai Rightongene
The main advantage of trading using opposite Fujian Longzhou and Shanghai Rightongene positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fujian Longzhou position performs unexpectedly, Shanghai Rightongene 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 Rightongene will offset losses from the drop in Shanghai Rightongene's long position.The idea behind Fujian Longzhou Transportation and Shanghai Rightongene Biotechnology 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.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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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