Correlation Between Shenzhen Bingchuan and Shandong Longquan
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By analyzing existing cross correlation between Shenzhen Bingchuan Network and Shandong Longquan Pipeline, you can compare the effects of market volatilities on Shenzhen Bingchuan and Shandong Longquan 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 Shenzhen Bingchuan with a short position of Shandong Longquan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shenzhen Bingchuan and Shandong Longquan.
Diversification Opportunities for Shenzhen Bingchuan and Shandong Longquan
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Shenzhen and Shandong is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Shenzhen Bingchuan Network and Shandong Longquan Pipeline in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shandong Longquan and Shenzhen Bingchuan 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 Shenzhen Bingchuan Network are associated (or correlated) with Shandong Longquan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shandong Longquan has no effect on the direction of Shenzhen Bingchuan i.e., Shenzhen Bingchuan and Shandong Longquan go up and down completely randomly.
Pair Corralation between Shenzhen Bingchuan and Shandong Longquan
Assuming the 90 days trading horizon Shenzhen Bingchuan Network is expected to generate 2.13 times more return on investment than Shandong Longquan. However, Shenzhen Bingchuan is 2.13 times more volatile than Shandong Longquan Pipeline. It trades about 0.25 of its potential returns per unit of risk. Shandong Longquan Pipeline is currently generating about 0.01 per unit of risk. If you would invest 1,840 in Shenzhen Bingchuan Network on September 1, 2024 and sell it today you would earn a total of 493.00 from holding Shenzhen Bingchuan Network or generate 26.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.65% |
| Values | Daily Returns |
Shenzhen Bingchuan Network vs. Shandong Longquan Pipeline
Performance |
| Timeline |
| Shenzhen Bingchuan |
| Shandong Longquan |
Shenzhen Bingchuan and Shandong Longquan Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shenzhen Bingchuan and Shandong Longquan
The main advantage of trading using opposite Shenzhen Bingchuan and Shandong Longquan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shenzhen Bingchuan position performs unexpectedly, Shandong Longquan 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 Shandong Longquan will offset losses from the drop in Shandong Longquan's long position.| Shenzhen Bingchuan vs. Shenzhen MYS Environmental | Shenzhen Bingchuan vs. AVIC Fund Management | Shenzhen Bingchuan vs. Penghua Shenzhen Energy | Shenzhen Bingchuan vs. Jizhong Energy Resources |
| Shandong Longquan vs. Zhongrun Resources Investment | Shandong Longquan vs. Anji Foodstuff Co | Shandong Longquan vs. Henan Shuanghui Investment | Shandong Longquan vs. Fujian Anjoy Foods |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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