Correlation Between Changshu Ruite and Shenzhen Hans
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By analyzing existing cross correlation between Changshu Ruite Electric and Shenzhen Hans CNC, you can compare the effects of market volatilities on Changshu Ruite and Shenzhen Hans 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 Changshu Ruite with a short position of Shenzhen Hans. Check out your portfolio center. Please also check ongoing floating volatility patterns of Changshu Ruite and Shenzhen Hans.
Diversification Opportunities for Changshu Ruite and Shenzhen Hans
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Changshu and Shenzhen is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Changshu Ruite Electric and Shenzhen Hans CNC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shenzhen Hans CNC and Changshu Ruite 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 Changshu Ruite Electric are associated (or correlated) with Shenzhen Hans. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shenzhen Hans CNC has no effect on the direction of Changshu Ruite i.e., Changshu Ruite and Shenzhen Hans go up and down completely randomly.
Pair Corralation between Changshu Ruite and Shenzhen Hans
Assuming the 90 days trading horizon Changshu Ruite is expected to generate 6.42 times less return on investment than Shenzhen Hans. But when comparing it to its historical volatility, Changshu Ruite Electric is 1.32 times less risky than Shenzhen Hans. It trades about 0.06 of its potential returns per unit of risk. Shenzhen Hans CNC is currently generating about 0.3 of returns per unit of risk over similar time horizon. If you would invest 3,360 in Shenzhen Hans CNC on November 7, 2024 and sell it today you would earn a total of 446.00 from holding Shenzhen Hans CNC or generate 13.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Changshu Ruite Electric vs. Shenzhen Hans CNC
Performance |
| Timeline |
| Changshu Ruite Electric |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Shenzhen Hans CNC |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Insignificant
Changshu Ruite and Shenzhen Hans Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Changshu Ruite and Shenzhen Hans
The main advantage of trading using opposite Changshu Ruite and Shenzhen Hans positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Changshu Ruite position performs unexpectedly, Shenzhen Hans 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 Shenzhen Hans will offset losses from the drop in Shenzhen Hans' long position.The idea behind Changshu Ruite Electric and Shenzhen Hans CNC 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.| Shenzhen Hans vs. Shanghai SK Automation | Shenzhen Hans vs. Chongqing Mas SciTech | Shenzhen Hans vs. Zhejiang Kaishan Compressor |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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