Correlation Between Shanghai Phichem and Huaibei Mining
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By analyzing existing cross correlation between Shanghai Phichem Material and Huaibei Mining Holdings, you can compare the effects of market volatilities on Shanghai Phichem and Huaibei Mining 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 Shanghai Phichem with a short position of Huaibei Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shanghai Phichem and Huaibei Mining.
Diversification Opportunities for Shanghai Phichem and Huaibei Mining
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Shanghai and Huaibei is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Shanghai Phichem Material and Huaibei Mining Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Huaibei Mining Holdings and Shanghai Phichem 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 Shanghai Phichem Material are associated (or correlated) with Huaibei Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Huaibei Mining Holdings has no effect on the direction of Shanghai Phichem i.e., Shanghai Phichem and Huaibei Mining go up and down completely randomly.
Pair Corralation between Shanghai Phichem and Huaibei Mining
Assuming the 90 days trading horizon Shanghai Phichem Material is expected to generate 1.74 times more return on investment than Huaibei Mining. However, Shanghai Phichem is 1.74 times more volatile than Huaibei Mining Holdings. It trades about 0.05 of its potential returns per unit of risk. Huaibei Mining Holdings is currently generating about -0.04 per unit of risk. If you would invest 1,178 in Shanghai Phichem Material on November 7, 2024 and sell it today you would earn a total of 407.00 from holding Shanghai Phichem Material or generate 34.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Shanghai Phichem Material vs. Huaibei Mining Holdings
Performance |
| Timeline |
| Shanghai Phichem Material |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Huaibei Mining Holdings |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Shanghai Phichem and Huaibei Mining Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shanghai Phichem and Huaibei Mining
The main advantage of trading using opposite Shanghai Phichem and Huaibei Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shanghai Phichem position performs unexpectedly, Huaibei Mining 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 Huaibei Mining will offset losses from the drop in Huaibei Mining's long position.The idea behind Shanghai Phichem Material and Huaibei Mining Holdings 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 Transaction History module to view history of all your transactions and understand their impact on performance.
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