Correlation Between Xinjiang Communications and Hunan Investment
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By analyzing existing cross correlation between Xinjiang Communications Construction and Hunan Investment Group, you can compare the effects of market volatilities on Xinjiang Communications and Hunan Investment 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 Xinjiang Communications with a short position of Hunan Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Xinjiang Communications and Hunan Investment.
Diversification Opportunities for Xinjiang Communications and Hunan Investment
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Xinjiang and Hunan is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Xinjiang Communications Constr and Hunan Investment Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hunan Investment and Xinjiang Communications 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 Xinjiang Communications Construction are associated (or correlated) with Hunan Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hunan Investment has no effect on the direction of Xinjiang Communications i.e., Xinjiang Communications and Hunan Investment go up and down completely randomly.
Pair Corralation between Xinjiang Communications and Hunan Investment
Assuming the 90 days trading horizon Xinjiang Communications Construction is expected to under-perform the Hunan Investment. In addition to that, Xinjiang Communications is 1.1 times more volatile than Hunan Investment Group. It trades about -0.25 of its total potential returns per unit of risk. Hunan Investment Group is currently generating about -0.03 per unit of volatility. If you would invest 527.00 in Hunan Investment Group on October 24, 2024 and sell it today you would lose (9.00) from holding Hunan Investment Group or give up 1.71% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Xinjiang Communications Constr vs. Hunan Investment Group
Performance |
| Timeline |
| Xinjiang Communications |
| Hunan Investment |
Xinjiang Communications and Hunan Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Xinjiang Communications and Hunan Investment
The main advantage of trading using opposite Xinjiang Communications and Hunan Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Xinjiang Communications position performs unexpectedly, Hunan Investment 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 Investment will offset losses from the drop in Hunan Investment's long position.The idea behind Xinjiang Communications Construction and Hunan Investment Group 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.
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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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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