Correlation Between Guangdong Wens and Liaoning Dingjide
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By analyzing existing cross correlation between Guangdong Wens Foodstuff and Liaoning Dingjide Petrochemical, you can compare the effects of market volatilities on Guangdong Wens and Liaoning Dingjide 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 Liaoning Dingjide. Check out your portfolio center. Please also check ongoing floating volatility patterns of Guangdong Wens and Liaoning Dingjide.
Diversification Opportunities for Guangdong Wens and Liaoning Dingjide
-0.33 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Guangdong and Liaoning is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Guangdong Wens Foodstuff and Liaoning Dingjide Petrochemica in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Liaoning Dingjide 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 Liaoning Dingjide. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Liaoning Dingjide has no effect on the direction of Guangdong Wens i.e., Guangdong Wens and Liaoning Dingjide go up and down completely randomly.
Pair Corralation between Guangdong Wens and Liaoning Dingjide
Assuming the 90 days trading horizon Guangdong Wens Foodstuff is expected to generate 0.7 times more return on investment than Liaoning Dingjide. However, Guangdong Wens Foodstuff is 1.44 times less risky than Liaoning Dingjide. It trades about -0.01 of its potential returns per unit of risk. Liaoning Dingjide Petrochemical is currently generating about -0.04 per unit of risk. If you would invest 1,896 in Guangdong Wens Foodstuff on November 7, 2024 and sell it today you would lose (283.00) from holding Guangdong Wens Foodstuff or give up 14.93% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Guangdong Wens Foodstuff vs. Liaoning Dingjide Petrochemica
Performance |
| Timeline |
| Guangdong Wens Foodstuff |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Liaoning Dingjide |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Weak
Guangdong Wens and Liaoning Dingjide Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Guangdong Wens and Liaoning Dingjide
The main advantage of trading using opposite Guangdong Wens and Liaoning Dingjide positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Guangdong Wens position performs unexpectedly, Liaoning Dingjide 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 Liaoning Dingjide will offset losses from the drop in Liaoning Dingjide's long position.The idea behind Guangdong Wens Foodstuff and Liaoning Dingjide Petrochemical 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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