Correlation Between Xinjiang Communications and Aerospace
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By analyzing existing cross correlation between Xinjiang Communications Construction and Aerospace Hi Tech Holding, you can compare the effects of market volatilities on Xinjiang Communications and Aerospace 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 Aerospace. Check out your portfolio center. Please also check ongoing floating volatility patterns of Xinjiang Communications and Aerospace.
Diversification Opportunities for Xinjiang Communications and Aerospace
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Xinjiang and Aerospace is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Xinjiang Communications Constr and Aerospace Hi Tech Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aerospace Hi Tech 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 Aerospace. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aerospace Hi Tech has no effect on the direction of Xinjiang Communications i.e., Xinjiang Communications and Aerospace go up and down completely randomly.
Pair Corralation between Xinjiang Communications and Aerospace
Assuming the 90 days trading horizon Xinjiang Communications is expected to generate 7.39 times less return on investment than Aerospace. But when comparing it to its historical volatility, Xinjiang Communications Construction is 1.18 times less risky than Aerospace. It trades about 0.01 of its potential returns per unit of risk. Aerospace Hi Tech Holding is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 803.00 in Aerospace Hi Tech Holding on October 20, 2024 and sell it today you would earn a total of 238.00 from holding Aerospace Hi Tech Holding or generate 29.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Xinjiang Communications Constr vs. Aerospace Hi Tech Holding
Performance |
| Timeline |
| Xinjiang Communications |
| Aerospace Hi Tech |
Xinjiang Communications and Aerospace Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Xinjiang Communications and Aerospace
The main advantage of trading using opposite Xinjiang Communications and Aerospace positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Xinjiang Communications position performs unexpectedly, Aerospace 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 Aerospace will offset losses from the drop in Aerospace's long position.The idea behind Xinjiang Communications Construction and Aerospace Hi Tech Holding 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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