Correlation Between Guangdong Jinming and Zhejiang Qianjiang
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By analyzing existing cross correlation between Guangdong Jinming Machinery and Zhejiang Qianjiang Motorcycle, you can compare the effects of market volatilities on Guangdong Jinming and Zhejiang Qianjiang 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 Guangdong Jinming with a short position of Zhejiang Qianjiang. Check out your portfolio center. Please also check ongoing floating volatility patterns of Guangdong Jinming and Zhejiang Qianjiang.
Diversification Opportunities for Guangdong Jinming and Zhejiang Qianjiang
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Guangdong and Zhejiang is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Guangdong Jinming Machinery and Zhejiang Qianjiang Motorcycle in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zhejiang Qianjiang and Guangdong Jinming 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 Guangdong Jinming Machinery are associated (or correlated) with Zhejiang Qianjiang. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zhejiang Qianjiang has no effect on the direction of Guangdong Jinming i.e., Guangdong Jinming and Zhejiang Qianjiang go up and down completely randomly.
Pair Corralation between Guangdong Jinming and Zhejiang Qianjiang
Assuming the 90 days trading horizon Guangdong Jinming Machinery is expected to generate 1.55 times more return on investment than Zhejiang Qianjiang. However, Guangdong Jinming is 1.55 times more volatile than Zhejiang Qianjiang Motorcycle. It trades about 0.18 of its potential returns per unit of risk. Zhejiang Qianjiang Motorcycle is currently generating about 0.05 per unit of risk. If you would invest 445.00 in Guangdong Jinming Machinery on September 12, 2024 and sell it today you would earn a total of 240.00 from holding Guangdong Jinming Machinery or generate 53.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Guangdong Jinming Machinery vs. Zhejiang Qianjiang Motorcycle
Performance |
| Timeline |
| Guangdong Jinming |
| Zhejiang Qianjiang |
Guangdong Jinming and Zhejiang Qianjiang Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Guangdong Jinming and Zhejiang Qianjiang
The main advantage of trading using opposite Guangdong Jinming and Zhejiang Qianjiang positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Guangdong Jinming position performs unexpectedly, Zhejiang Qianjiang 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 Zhejiang Qianjiang will offset losses from the drop in Zhejiang Qianjiang's long position.| Guangdong Jinming vs. Agricultural Bank of | Guangdong Jinming vs. Industrial and Commercial | Guangdong Jinming vs. Bank of China | Guangdong Jinming vs. PetroChina Co Ltd |
| Zhejiang Qianjiang vs. Lutian Machinery Co | Zhejiang Qianjiang vs. PetroChina Co Ltd | Zhejiang Qianjiang vs. Bank of China | Zhejiang Qianjiang vs. Gansu Jiu Steel |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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