Correlation Between Bank of Suzhou and Shandong Longquan
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By analyzing existing cross correlation between Bank of Suzhou and Shandong Longquan Pipeline, you can compare the effects of market volatilities on Bank of Suzhou and Shandong Longquan 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 Bank of Suzhou with a short position of Shandong Longquan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of Suzhou and Shandong Longquan.
Diversification Opportunities for Bank of Suzhou and Shandong Longquan
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Bank and Shandong is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Bank of Suzhou and Shandong Longquan Pipeline in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shandong Longquan and Bank of Suzhou 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 Bank of Suzhou are associated (or correlated) with Shandong Longquan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shandong Longquan has no effect on the direction of Bank of Suzhou i.e., Bank of Suzhou and Shandong Longquan go up and down completely randomly.
Pair Corralation between Bank of Suzhou and Shandong Longquan
Assuming the 90 days trading horizon Bank of Suzhou is expected to generate 1.31 times less return on investment than Shandong Longquan. But when comparing it to its historical volatility, Bank of Suzhou is 1.78 times less risky than Shandong Longquan. It trades about 0.15 of its potential returns per unit of risk. Shandong Longquan Pipeline is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 469.00 in Shandong Longquan Pipeline on September 4, 2024 and sell it today you would earn a total of 23.00 from holding Shandong Longquan Pipeline or generate 4.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bank of Suzhou vs. Shandong Longquan Pipeline
Performance |
| Timeline |
| Bank of Suzhou |
| Shandong Longquan |
Bank of Suzhou and Shandong Longquan Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of Suzhou and Shandong Longquan
The main advantage of trading using opposite Bank of Suzhou and Shandong Longquan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of Suzhou position performs unexpectedly, Shandong Longquan 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 Shandong Longquan will offset losses from the drop in Shandong Longquan's long position.| Bank of Suzhou vs. Industrial and Commercial | Bank of Suzhou vs. Agricultural Bank of | Bank of Suzhou vs. China Construction Bank | Bank of Suzhou vs. Bank of China |
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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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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