Correlation Between Xiamen Jihong and Shaanxi Meineng
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By analyzing existing cross correlation between Xiamen Jihong Package and Shaanxi Meineng Clean, you can compare the effects of market volatilities on Xiamen Jihong and Shaanxi Meineng 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 Xiamen Jihong with a short position of Shaanxi Meineng. Check out your portfolio center. Please also check ongoing floating volatility patterns of Xiamen Jihong and Shaanxi Meineng.
Diversification Opportunities for Xiamen Jihong and Shaanxi Meineng
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Xiamen and Shaanxi is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Xiamen Jihong Package and Shaanxi Meineng Clean in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shaanxi Meineng Clean and Xiamen Jihong 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 Xiamen Jihong Package are associated (or correlated) with Shaanxi Meineng. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shaanxi Meineng Clean has no effect on the direction of Xiamen Jihong i.e., Xiamen Jihong and Shaanxi Meineng go up and down completely randomly.
Pair Corralation between Xiamen Jihong and Shaanxi Meineng
Assuming the 90 days trading horizon Xiamen Jihong Package is expected to generate 1.29 times more return on investment than Shaanxi Meineng. However, Xiamen Jihong is 1.29 times more volatile than Shaanxi Meineng Clean. It trades about 0.2 of its potential returns per unit of risk. Shaanxi Meineng Clean is currently generating about 0.12 per unit of risk. If you would invest 1,189 in Xiamen Jihong Package on November 7, 2024 and sell it today you would earn a total of 97.00 from holding Xiamen Jihong Package or generate 8.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Xiamen Jihong Package vs. Shaanxi Meineng Clean
Performance |
| Timeline |
| Xiamen Jihong Package |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Shaanxi Meineng Clean |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Xiamen Jihong and Shaanxi Meineng Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Xiamen Jihong and Shaanxi Meineng
The main advantage of trading using opposite Xiamen Jihong and Shaanxi Meineng positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Xiamen Jihong position performs unexpectedly, Shaanxi Meineng 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 Shaanxi Meineng will offset losses from the drop in Shaanxi Meineng's long position.The idea behind Xiamen Jihong Package and Shaanxi Meineng Clean 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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