Correlation Between Guangdong Tianhe and Shandong Ruifeng
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By analyzing existing cross correlation between Guangdong Tianhe Agricultural and Shandong Ruifeng Chemical, you can compare the effects of market volatilities on Guangdong Tianhe and Shandong Ruifeng 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 Guangdong Tianhe with a short position of Shandong Ruifeng. Check out your portfolio center. Please also check ongoing floating volatility patterns of Guangdong Tianhe and Shandong Ruifeng.
Diversification Opportunities for Guangdong Tianhe and Shandong Ruifeng
0.45 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Guangdong and Shandong is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Guangdong Tianhe Agricultural and Shandong Ruifeng Chemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shandong Ruifeng Chemical and Guangdong Tianhe 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 Guangdong Tianhe Agricultural are associated (or correlated) with Shandong Ruifeng. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shandong Ruifeng Chemical has no effect on the direction of Guangdong Tianhe i.e., Guangdong Tianhe and Shandong Ruifeng go up and down completely randomly.
Pair Corralation between Guangdong Tianhe and Shandong Ruifeng
Assuming the 90 days trading horizon Guangdong Tianhe Agricultural is expected to generate 1.19 times more return on investment than Shandong Ruifeng. However, Guangdong Tianhe is 1.19 times more volatile than Shandong Ruifeng Chemical. It trades about 0.21 of its potential returns per unit of risk. Shandong Ruifeng Chemical is currently generating about 0.08 per unit of risk. If you would invest 563.00 in Guangdong Tianhe Agricultural on November 7, 2024 and sell it today you would earn a total of 39.00 from holding Guangdong Tianhe Agricultural or generate 6.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Guangdong Tianhe Agricultural vs. Shandong Ruifeng Chemical
Performance |
| Timeline |
| Guangdong Tianhe Agr |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Shandong Ruifeng Chemical |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Guangdong Tianhe and Shandong Ruifeng Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Guangdong Tianhe and Shandong Ruifeng
The main advantage of trading using opposite Guangdong Tianhe and Shandong Ruifeng positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Guangdong Tianhe position performs unexpectedly, Shandong Ruifeng 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 Ruifeng will offset losses from the drop in Shandong Ruifeng's long position.The idea behind Guangdong Tianhe Agricultural and Shandong Ruifeng Chemical 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.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 CEOs Directory module to screen CEOs from public companies around the world.
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