Correlation Between Chongqing Shunbo and Shanghai Yanpu
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By analyzing existing cross correlation between Chongqing Shunbo Aluminum and Shanghai Yanpu Metal, you can compare the effects of market volatilities on Chongqing Shunbo 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 Chongqing Shunbo with a short position of Shanghai Yanpu. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chongqing Shunbo and Shanghai Yanpu.
Diversification Opportunities for Chongqing Shunbo and Shanghai Yanpu
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Chongqing and Shanghai is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Chongqing Shunbo Aluminum 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 Chongqing Shunbo 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 Chongqing Shunbo Aluminum 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 Chongqing Shunbo i.e., Chongqing Shunbo and Shanghai Yanpu go up and down completely randomly.
Pair Corralation between Chongqing Shunbo and Shanghai Yanpu
Assuming the 90 days trading horizon Chongqing Shunbo is expected to generate 2.69 times less return on investment than Shanghai Yanpu. But when comparing it to its historical volatility, Chongqing Shunbo Aluminum is 1.38 times less risky than Shanghai Yanpu. It trades about 0.04 of its potential returns per unit of risk. Shanghai Yanpu Metal is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 3,694 in Shanghai Yanpu Metal on August 28, 2024 and sell it today you would earn a total of 173.00 from holding Shanghai Yanpu Metal or generate 4.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Chongqing Shunbo Aluminum vs. Shanghai Yanpu Metal
Performance |
| Timeline |
| Chongqing Shunbo Aluminum |
| Shanghai Yanpu Metal |
Chongqing Shunbo and Shanghai Yanpu Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chongqing Shunbo and Shanghai Yanpu
The main advantage of trading using opposite Chongqing Shunbo and Shanghai Yanpu positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chongqing Shunbo 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.| Chongqing Shunbo vs. Wanhua Chemical Group | Chongqing Shunbo vs. Shandong Gold Mining | Chongqing Shunbo vs. Rongsheng Petrochemical Co | Chongqing Shunbo vs. Inner Mongolia BaoTou |
| Shanghai Yanpu vs. Loongson Technology Corp | Shanghai Yanpu vs. Chongqing Road Bridge | Shanghai Yanpu vs. Shenzhen Fortune Trend | Shanghai Yanpu vs. Wuhan Xianglong Power |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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