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
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Guangdong and Shandong is 0.64. 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 1.15 times more return on investment than Shandong Ruifeng. However, Guangdong Tianhe is 1.15 times more volatile than Shandong Ruifeng Chemical. It trades about -0.03 of its potential returns per unit of risk. Shandong Ruifeng Chemical is currently generating about -0.36 per unit of risk. If you would invest 633.00 in Guangdong Tianhe Agricultural on September 25, 2024 and sell it today you would lose (26.00) from holding Guangdong Tianhe Agricultural or give up 4.11% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Guangdong Tianhe Agricultural vs. Shandong Ruifeng Chemical
Performance |
| Timeline |
| Guangdong Tianhe Agr |
| Shandong Ruifeng Chemical |
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.| Guangdong Tianhe vs. Zijin Mining Group | Guangdong Tianhe vs. Wanhua Chemical Group | Guangdong Tianhe vs. Baoshan Iron Steel | Guangdong Tianhe vs. Shandong Gold Mining |
| Shandong Ruifeng vs. Zijin Mining Group | Shandong Ruifeng vs. Baoshan Iron Steel | Shandong Ruifeng vs. Shandong Gold Mining | Shandong Ruifeng vs. Rongsheng Petrochemical Co |
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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