Correlation Between Shiny Chemical and Yuan High
Can any of the company-specific risk be diversified away by investing in both Shiny Chemical and Yuan High at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Shiny Chemical and Yuan High into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Shiny Chemical Industrial and Yuan High Tech Development, you can compare the effects of market volatilities on Shiny Chemical and Yuan High 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 Shiny Chemical with a short position of Yuan High. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shiny Chemical and Yuan High.
Diversification Opportunities for Shiny Chemical and Yuan High
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Shiny and Yuan is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Shiny Chemical Industrial and Yuan High Tech Development in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Yuan High Tech and Shiny Chemical 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 Shiny Chemical Industrial are associated (or correlated) with Yuan High. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Yuan High Tech has no effect on the direction of Shiny Chemical i.e., Shiny Chemical and Yuan High go up and down completely randomly.
Pair Corralation between Shiny Chemical and Yuan High
Assuming the 90 days trading horizon Shiny Chemical Industrial is expected to generate 0.84 times more return on investment than Yuan High. However, Shiny Chemical Industrial is 1.19 times less risky than Yuan High. It trades about -0.01 of its potential returns per unit of risk. Yuan High Tech Development is currently generating about -0.02 per unit of risk. If you would invest 16,600 in Shiny Chemical Industrial on September 12, 2024 and sell it today you would lose (300.00) from holding Shiny Chemical Industrial or give up 1.81% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Shiny Chemical Industrial vs. Yuan High Tech Development
Performance |
| Timeline |
| Shiny Chemical Industrial |
| Yuan High Tech |
Shiny Chemical and Yuan High Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shiny Chemical and Yuan High
The main advantage of trading using opposite Shiny Chemical and Yuan High positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shiny Chemical position performs unexpectedly, Yuan High 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 Yuan High will offset losses from the drop in Yuan High's long position.| Shiny Chemical vs. China Steel Chemical | Shiny Chemical vs. TTET Union Corp | Shiny Chemical vs. Eternal Materials Co | Shiny Chemical vs. Yung Chi Paint |
| Yuan High vs. Jetwell Computer Co | Yuan High vs. Silicon Power Computer | Yuan High vs. Chi Hua Fitness | Yuan High vs. Ching Feng Home |
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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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