Correlation Between Shenzhen Zhongzhuang and Shenzhen Glory
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By analyzing existing cross correlation between Shenzhen Zhongzhuang Construction and Shenzhen Glory Medical, you can compare the effects of market volatilities on Shenzhen Zhongzhuang and Shenzhen Glory 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 Shenzhen Glory. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shenzhen Zhongzhuang and Shenzhen Glory.
Diversification Opportunities for Shenzhen Zhongzhuang and Shenzhen Glory
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Shenzhen and Shenzhen is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Shenzhen Zhongzhuang Construct and Shenzhen Glory Medical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shenzhen Glory Medical 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 Shenzhen Glory. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shenzhen Glory Medical has no effect on the direction of Shenzhen Zhongzhuang i.e., Shenzhen Zhongzhuang and Shenzhen Glory go up and down completely randomly.
Pair Corralation between Shenzhen Zhongzhuang and Shenzhen Glory
Assuming the 90 days trading horizon Shenzhen Zhongzhuang Construction is expected to generate 1.55 times more return on investment than Shenzhen Glory. However, Shenzhen Zhongzhuang is 1.55 times more volatile than Shenzhen Glory Medical. It trades about 0.16 of its potential returns per unit of risk. Shenzhen Glory Medical is currently generating about 0.16 per unit of risk. If you would invest 349.00 in Shenzhen Zhongzhuang Construction on November 7, 2024 and sell it today you would earn a total of 31.00 from holding Shenzhen Zhongzhuang Construction or generate 8.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Shenzhen Zhongzhuang Construct vs. Shenzhen Glory Medical
Performance |
| Timeline |
| Shenzhen Zhongzhuang |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
OK
| Shenzhen Glory Medical |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Shenzhen Zhongzhuang and Shenzhen Glory Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shenzhen Zhongzhuang and Shenzhen Glory
The main advantage of trading using opposite Shenzhen Zhongzhuang and Shenzhen Glory positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shenzhen Zhongzhuang position performs unexpectedly, Shenzhen Glory 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 Shenzhen Glory will offset losses from the drop in Shenzhen Glory's long position.The idea behind Shenzhen Zhongzhuang Construction and Shenzhen Glory Medical 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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