Correlation Between Shenzhen Zhongzhuang and China Longyuan
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By analyzing existing cross correlation between Shenzhen Zhongzhuang Construction and China Longyuan Power, you can compare the effects of market volatilities on Shenzhen Zhongzhuang and China Longyuan 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 Shenzhen Zhongzhuang with a short position of China Longyuan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shenzhen Zhongzhuang and China Longyuan.
Diversification Opportunities for Shenzhen Zhongzhuang and China Longyuan
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Shenzhen and China is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Shenzhen Zhongzhuang Construct and China Longyuan Power in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Longyuan Power and Shenzhen Zhongzhuang 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 Shenzhen Zhongzhuang Construction are associated (or correlated) with China Longyuan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Longyuan Power has no effect on the direction of Shenzhen Zhongzhuang i.e., Shenzhen Zhongzhuang and China Longyuan go up and down completely randomly.
Pair Corralation between Shenzhen Zhongzhuang and China Longyuan
Assuming the 90 days trading horizon Shenzhen Zhongzhuang Construction is expected to generate 1.09 times more return on investment than China Longyuan. However, Shenzhen Zhongzhuang is 1.09 times more volatile than China Longyuan Power. It trades about 0.91 of its potential returns per unit of risk. China Longyuan Power is currently generating about -0.06 per unit of risk. If you would invest 213.00 in Shenzhen Zhongzhuang Construction on August 28, 2024 and sell it today you would earn a total of 170.00 from holding Shenzhen Zhongzhuang Construction or generate 79.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Shenzhen Zhongzhuang Construct vs. China Longyuan Power
Performance |
| Timeline |
| Shenzhen Zhongzhuang |
| China Longyuan Power |
Shenzhen Zhongzhuang and China Longyuan Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shenzhen Zhongzhuang and China Longyuan
The main advantage of trading using opposite Shenzhen Zhongzhuang and China Longyuan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shenzhen Zhongzhuang position performs unexpectedly, China Longyuan 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 China Longyuan will offset losses from the drop in China Longyuan's long position.| Shenzhen Zhongzhuang vs. Ming Yang Smart | Shenzhen Zhongzhuang vs. 159681 | Shenzhen Zhongzhuang vs. 159005 | Shenzhen Zhongzhuang vs. Loctek Ergonomic Technology |
| China Longyuan vs. Sinomach General Machinery | China Longyuan vs. Zijin Mining Group | China Longyuan vs. Zhongshan Public Utilities | China Longyuan vs. Shenzhen Zhongzhuang Construction |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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