Correlation Between Shenzhen Zhongzhuang and Hunan Tyen
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By analyzing existing cross correlation between Shenzhen Zhongzhuang Construction and Hunan Tyen Machinery, you can compare the effects of market volatilities on Shenzhen Zhongzhuang and Hunan Tyen 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 Hunan Tyen. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shenzhen Zhongzhuang and Hunan Tyen.
Diversification Opportunities for Shenzhen Zhongzhuang and Hunan Tyen
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Shenzhen and Hunan is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Shenzhen Zhongzhuang Construct and Hunan Tyen Machinery in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hunan Tyen Machinery 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 Hunan Tyen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hunan Tyen Machinery has no effect on the direction of Shenzhen Zhongzhuang i.e., Shenzhen Zhongzhuang and Hunan Tyen go up and down completely randomly.
Pair Corralation between Shenzhen Zhongzhuang and Hunan Tyen
Assuming the 90 days trading horizon Shenzhen Zhongzhuang Construction is expected to generate 0.67 times more return on investment than Hunan Tyen. However, Shenzhen Zhongzhuang Construction is 1.49 times less risky than Hunan Tyen. It trades about 1.05 of its potential returns per unit of risk. Hunan Tyen Machinery is currently generating about 0.05 per unit of risk. If you would invest 193.00 in Shenzhen Zhongzhuang Construction on August 25, 2024 and sell it today you would earn a total of 186.00 from holding Shenzhen Zhongzhuang Construction or generate 96.37% 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. Hunan Tyen Machinery
Performance |
| Timeline |
| Shenzhen Zhongzhuang |
| Hunan Tyen Machinery |
Shenzhen Zhongzhuang and Hunan Tyen Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shenzhen Zhongzhuang and Hunan Tyen
The main advantage of trading using opposite Shenzhen Zhongzhuang and Hunan Tyen positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shenzhen Zhongzhuang position performs unexpectedly, Hunan Tyen 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 Hunan Tyen will offset losses from the drop in Hunan Tyen's long position.| Shenzhen Zhongzhuang vs. Chengdu Kanghua Biological | Shenzhen Zhongzhuang vs. Beijing Wantai Biological | Shenzhen Zhongzhuang vs. Suzhou Novoprotein Scientific | Shenzhen Zhongzhuang vs. Aluminum Corp of |
| Hunan Tyen vs. Kweichow Moutai Co | Hunan Tyen vs. Contemporary Amperex Technology | Hunan Tyen vs. G bits Network Technology | Hunan Tyen vs. Beijing Roborock Technology |
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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