Correlation Between 159005 and 516220
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By analyzing existing cross correlation between 159005 and 516220, you can compare the effects of market volatilities on 159005 and 516220 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 159005 with a short position of 516220. Check out your portfolio center. Please also check ongoing floating volatility patterns of 159005 and 516220.
Diversification Opportunities for 159005 and 516220
Very poor diversification
The 3 months correlation between 159005 and 516220 is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding 159005 and 516220 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on 516220 and 159005 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 159005 are associated (or correlated) with 516220. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of 516220 has no effect on the direction of 159005 i.e., 159005 and 516220 go up and down completely randomly.
Pair Corralation between 159005 and 516220
Assuming the 90 days trading horizon 159005 is expected to generate 0.01 times more return on investment than 516220. However, 159005 is 72.75 times less risky than 516220. It trades about 0.13 of its potential returns per unit of risk. 516220 is currently generating about -0.03 per unit of risk. If you would invest 9,868 in 159005 on August 28, 2024 and sell it today you would earn a total of 132.00 from holding 159005 or generate 1.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
159005 vs. 516220
Performance |
| Timeline |
| 159005 |
| 516220 |
159005 and 516220 Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with 159005 and 516220
The main advantage of trading using opposite 159005 and 516220 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 159005 position performs unexpectedly, 516220 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 516220 will offset losses from the drop in 516220's long position.The idea behind 159005 and 516220 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.| 516220 vs. Shenzhen MTC Co | 516220 vs. Ming Yang Smart | 516220 vs. Changzhou Almaden Co | 516220 vs. 159005 |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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