Correlation Between Masterwork Machinery and Shenyang Huitian
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By analyzing existing cross correlation between Masterwork Machinery and Shenyang Huitian Thermal, you can compare the effects of market volatilities on Masterwork Machinery and Shenyang Huitian 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 Masterwork Machinery with a short position of Shenyang Huitian. Check out your portfolio center. Please also check ongoing floating volatility patterns of Masterwork Machinery and Shenyang Huitian.
Diversification Opportunities for Masterwork Machinery and Shenyang Huitian
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Masterwork and Shenyang is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Masterwork Machinery and Shenyang Huitian Thermal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shenyang Huitian Thermal and Masterwork Machinery 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 Masterwork Machinery are associated (or correlated) with Shenyang Huitian. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shenyang Huitian Thermal has no effect on the direction of Masterwork Machinery i.e., Masterwork Machinery and Shenyang Huitian go up and down completely randomly.
Pair Corralation between Masterwork Machinery and Shenyang Huitian
Assuming the 90 days trading horizon Masterwork Machinery is expected to generate 1.1 times more return on investment than Shenyang Huitian. However, Masterwork Machinery is 1.1 times more volatile than Shenyang Huitian Thermal. It trades about 0.01 of its potential returns per unit of risk. Shenyang Huitian Thermal is currently generating about 0.01 per unit of risk. If you would invest 578.00 in Masterwork Machinery on October 16, 2024 and sell it today you would lose (9.00) from holding Masterwork Machinery or give up 1.56% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.58% |
| Values | Daily Returns |
Masterwork Machinery vs. Shenyang Huitian Thermal
Performance |
| Timeline |
| Masterwork Machinery |
| Shenyang Huitian Thermal |
Masterwork Machinery and Shenyang Huitian Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Masterwork Machinery and Shenyang Huitian
The main advantage of trading using opposite Masterwork Machinery and Shenyang Huitian positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Masterwork Machinery position performs unexpectedly, Shenyang Huitian 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 Shenyang Huitian will offset losses from the drop in Shenyang Huitian's long position.The idea behind Masterwork Machinery and Shenyang Huitian Thermal 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.
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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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