Correlation Between Shenzhen Zhongzhuang and Shanghai Yanpu
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By analyzing existing cross correlation between Shenzhen Zhongzhuang Construction and Shanghai Yanpu Metal, you can compare the effects of market volatilities on Shenzhen Zhongzhuang and Shanghai Yanpu 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 Shanghai Yanpu. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shenzhen Zhongzhuang and Shanghai Yanpu.
Diversification Opportunities for Shenzhen Zhongzhuang and Shanghai Yanpu
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Shenzhen and Shanghai is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Shenzhen Zhongzhuang Construct and Shanghai Yanpu Metal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shanghai Yanpu Metal 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 Shanghai Yanpu. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shanghai Yanpu Metal has no effect on the direction of Shenzhen Zhongzhuang i.e., Shenzhen Zhongzhuang and Shanghai Yanpu go up and down completely randomly.
Pair Corralation between Shenzhen Zhongzhuang and Shanghai Yanpu
Assuming the 90 days trading horizon Shenzhen Zhongzhuang Construction is expected to generate 1.19 times more return on investment than Shanghai Yanpu. However, Shenzhen Zhongzhuang is 1.19 times more volatile than Shanghai Yanpu Metal. It trades about 1.05 of its potential returns per unit of risk. Shanghai Yanpu Metal is currently generating about -0.02 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. Shanghai Yanpu Metal
Performance |
| Timeline |
| Shenzhen Zhongzhuang |
| Shanghai Yanpu Metal |
Shenzhen Zhongzhuang and Shanghai Yanpu Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shenzhen Zhongzhuang and Shanghai Yanpu
The main advantage of trading using opposite Shenzhen Zhongzhuang and Shanghai Yanpu positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shenzhen Zhongzhuang position performs unexpectedly, Shanghai Yanpu 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 Yanpu will offset losses from the drop in Shanghai Yanpu'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 |
| Shanghai Yanpu vs. Kweichow Moutai Co | Shanghai Yanpu vs. Contemporary Amperex Technology | Shanghai Yanpu vs. G bits Network Technology | Shanghai Yanpu 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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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