Correlation Between Hubei Tech and Hefei Metalforming
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By analyzing existing cross correlation between Hubei Tech Semiconductors and Hefei Metalforming Mach, you can compare the effects of market volatilities on Hubei Tech and Hefei Metalforming 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 Hubei Tech with a short position of Hefei Metalforming. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hubei Tech and Hefei Metalforming.
Diversification Opportunities for Hubei Tech and Hefei Metalforming
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Hubei and Hefei is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Hubei Tech Semiconductors and Hefei Metalforming Mach in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hefei Metalforming Mach and Hubei Tech 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 Hubei Tech Semiconductors are associated (or correlated) with Hefei Metalforming. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hefei Metalforming Mach has no effect on the direction of Hubei Tech i.e., Hubei Tech and Hefei Metalforming go up and down completely randomly.
Pair Corralation between Hubei Tech and Hefei Metalforming
Assuming the 90 days trading horizon Hubei Tech is expected to generate 3.04 times less return on investment than Hefei Metalforming. But when comparing it to its historical volatility, Hubei Tech Semiconductors is 1.05 times less risky than Hefei Metalforming. It trades about 0.05 of its potential returns per unit of risk. Hefei Metalforming Mach is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 635.00 in Hefei Metalforming Mach on November 7, 2024 and sell it today you would earn a total of 46.00 from holding Hefei Metalforming Mach or generate 7.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hubei Tech Semiconductors vs. Hefei Metalforming Mach
Performance |
| Timeline |
| Hubei Tech Semiconductors |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Hefei Metalforming Mach |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Hubei Tech and Hefei Metalforming Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hubei Tech and Hefei Metalforming
The main advantage of trading using opposite Hubei Tech and Hefei Metalforming positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hubei Tech position performs unexpectedly, Hefei Metalforming 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 Hefei Metalforming will offset losses from the drop in Hefei Metalforming's long position.The idea behind Hubei Tech Semiconductors and Hefei Metalforming Mach 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 Global Correlations module to find global opportunities by holding instruments from different markets.
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