Correlation Between Hubei Dinglong and Guangzhou Zhujiang
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By analyzing existing cross correlation between Hubei Dinglong Chemical and Guangzhou Zhujiang Brewery, you can compare the effects of market volatilities on Hubei Dinglong and Guangzhou Zhujiang 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 Dinglong with a short position of Guangzhou Zhujiang. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hubei Dinglong and Guangzhou Zhujiang.
Diversification Opportunities for Hubei Dinglong and Guangzhou Zhujiang
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Hubei and Guangzhou is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Hubei Dinglong Chemical and Guangzhou Zhujiang Brewery in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guangzhou Zhujiang and Hubei Dinglong 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 Dinglong Chemical are associated (or correlated) with Guangzhou Zhujiang. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guangzhou Zhujiang has no effect on the direction of Hubei Dinglong i.e., Hubei Dinglong and Guangzhou Zhujiang go up and down completely randomly.
Pair Corralation between Hubei Dinglong and Guangzhou Zhujiang
Assuming the 90 days trading horizon Hubei Dinglong Chemical is expected to generate 1.55 times more return on investment than Guangzhou Zhujiang. However, Hubei Dinglong is 1.55 times more volatile than Guangzhou Zhujiang Brewery. It trades about 0.07 of its potential returns per unit of risk. Guangzhou Zhujiang Brewery is currently generating about 0.05 per unit of risk. If you would invest 2,240 in Hubei Dinglong Chemical on August 28, 2024 and sell it today you would earn a total of 471.00 from holding Hubei Dinglong Chemical or generate 21.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hubei Dinglong Chemical vs. Guangzhou Zhujiang Brewery
Performance |
| Timeline |
| Hubei Dinglong Chemical |
| Guangzhou Zhujiang |
Hubei Dinglong and Guangzhou Zhujiang Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hubei Dinglong and Guangzhou Zhujiang
The main advantage of trading using opposite Hubei Dinglong and Guangzhou Zhujiang positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hubei Dinglong position performs unexpectedly, Guangzhou Zhujiang 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 Guangzhou Zhujiang will offset losses from the drop in Guangzhou Zhujiang's long position.| Hubei Dinglong vs. Zijin Mining Group | Hubei Dinglong vs. Baoshan Iron Steel | Hubei Dinglong vs. Shandong Gold Mining | Hubei Dinglong vs. Rongsheng Petrochemical Co |
| Guangzhou Zhujiang vs. Gome Telecom Equipment | Guangzhou Zhujiang vs. Wuhan Yangtze Communication | Guangzhou Zhujiang vs. Railway Signal Communication | Guangzhou Zhujiang vs. Zhongtong Guomai Communication |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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