Correlation Between Guangdong Wens and Sichuan Jiuyuan
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By analyzing existing cross correlation between Guangdong Wens Foodstuff and Sichuan Jiuyuan Yinhai, you can compare the effects of market volatilities on Guangdong Wens and Sichuan Jiuyuan 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 Wens with a short position of Sichuan Jiuyuan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Guangdong Wens and Sichuan Jiuyuan.
Diversification Opportunities for Guangdong Wens and Sichuan Jiuyuan
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Guangdong and Sichuan is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Guangdong Wens Foodstuff and Sichuan Jiuyuan Yinhai in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sichuan Jiuyuan Yinhai and Guangdong Wens 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 Wens Foodstuff are associated (or correlated) with Sichuan Jiuyuan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sichuan Jiuyuan Yinhai has no effect on the direction of Guangdong Wens i.e., Guangdong Wens and Sichuan Jiuyuan go up and down completely randomly.
Pair Corralation between Guangdong Wens and Sichuan Jiuyuan
Assuming the 90 days trading horizon Guangdong Wens is expected to generate 4.1 times less return on investment than Sichuan Jiuyuan. But when comparing it to its historical volatility, Guangdong Wens Foodstuff is 1.53 times less risky than Sichuan Jiuyuan. It trades about 0.07 of its potential returns per unit of risk. Sichuan Jiuyuan Yinhai is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest 1,304 in Sichuan Jiuyuan Yinhai on September 12, 2024 and sell it today you would earn a total of 762.00 from holding Sichuan Jiuyuan Yinhai or generate 58.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Guangdong Wens Foodstuff vs. Sichuan Jiuyuan Yinhai
Performance |
| Timeline |
| Guangdong Wens Foodstuff |
| Sichuan Jiuyuan Yinhai |
Guangdong Wens and Sichuan Jiuyuan Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Guangdong Wens and Sichuan Jiuyuan
The main advantage of trading using opposite Guangdong Wens and Sichuan Jiuyuan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Guangdong Wens position performs unexpectedly, Sichuan Jiuyuan 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 Sichuan Jiuyuan will offset losses from the drop in Sichuan Jiuyuan's long position.| Guangdong Wens vs. Nanjing Putian Telecommunications | Guangdong Wens vs. Tianjin Realty Development | Guangdong Wens vs. Kangyue Technology Co | Guangdong Wens vs. Shenzhen Hifuture Electric |
| Sichuan Jiuyuan vs. Sinofibers Technology Co | Sichuan Jiuyuan vs. JiShi Media Co | Sichuan Jiuyuan vs. Yuan Longping High tech | Sichuan Jiuyuan vs. Jiujiang Shanshui Technology |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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