Correlation Between 159681 and Shanxi Lanhua
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By analyzing existing cross correlation between 159681 and Shanxi Lanhua Sci Tech, you can compare the effects of market volatilities on 159681 and Shanxi Lanhua 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 159681 with a short position of Shanxi Lanhua. Check out your portfolio center. Please also check ongoing floating volatility patterns of 159681 and Shanxi Lanhua.
Diversification Opportunities for 159681 and Shanxi Lanhua
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between 159681 and Shanxi is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding 159681 and Shanxi Lanhua Sci Tech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shanxi Lanhua Sci and 159681 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 159681 are associated (or correlated) with Shanxi Lanhua. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shanxi Lanhua Sci has no effect on the direction of 159681 i.e., 159681 and Shanxi Lanhua go up and down completely randomly.
Pair Corralation between 159681 and Shanxi Lanhua
Assuming the 90 days trading horizon 159681 is expected to generate 1.23 times more return on investment than Shanxi Lanhua. However, 159681 is 1.23 times more volatile than Shanxi Lanhua Sci Tech. It trades about -0.15 of its potential returns per unit of risk. Shanxi Lanhua Sci Tech is currently generating about -0.25 per unit of risk. If you would invest 96.00 in 159681 on October 22, 2024 and sell it today you would lose (5.00) from holding 159681 or give up 5.21% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
159681 vs. Shanxi Lanhua Sci Tech
Performance |
| Timeline |
| 159681 |
| Shanxi Lanhua Sci |
159681 and Shanxi Lanhua Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with 159681 and Shanxi Lanhua
The main advantage of trading using opposite 159681 and Shanxi Lanhua positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 159681 position performs unexpectedly, Shanxi Lanhua 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 Shanxi Lanhua will offset losses from the drop in Shanxi Lanhua's long position.The idea behind 159681 and Shanxi Lanhua Sci Tech 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.| Shanxi Lanhua vs. Zhejiang Kingland Pipeline | Shanxi Lanhua vs. Shenzhen MTC Co | Shanxi Lanhua vs. Ming Yang Smart | Shanxi Lanhua vs. Changzhou Almaden 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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