Correlation Between Shandong Intco and Xinxiang Chemical
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By analyzing existing cross correlation between Shandong Intco Medical and Xinxiang Chemical Fiber, you can compare the effects of market volatilities on Shandong Intco and Xinxiang Chemical 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 Shandong Intco with a short position of Xinxiang Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shandong Intco and Xinxiang Chemical.
Diversification Opportunities for Shandong Intco and Xinxiang Chemical
0.37 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Shandong and Xinxiang is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Shandong Intco Medical and Xinxiang Chemical Fiber in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xinxiang Chemical Fiber and Shandong Intco 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 Shandong Intco Medical are associated (or correlated) with Xinxiang Chemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xinxiang Chemical Fiber has no effect on the direction of Shandong Intco i.e., Shandong Intco and Xinxiang Chemical go up and down completely randomly.
Pair Corralation between Shandong Intco and Xinxiang Chemical
Assuming the 90 days trading horizon Shandong Intco Medical is expected to generate 1.24 times more return on investment than Xinxiang Chemical. However, Shandong Intco is 1.24 times more volatile than Xinxiang Chemical Fiber. It trades about 0.31 of its potential returns per unit of risk. Xinxiang Chemical Fiber is currently generating about 0.32 per unit of risk. If you would invest 2,461 in Shandong Intco Medical on November 7, 2024 and sell it today you would earn a total of 258.00 from holding Shandong Intco Medical or generate 10.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Shandong Intco Medical vs. Xinxiang Chemical Fiber
Performance |
| Timeline |
| Shandong Intco Medical |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Xinxiang Chemical Fiber |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Insignificant
Shandong Intco and Xinxiang Chemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shandong Intco and Xinxiang Chemical
The main advantage of trading using opposite Shandong Intco and Xinxiang Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shandong Intco position performs unexpectedly, Xinxiang Chemical 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 Xinxiang Chemical will offset losses from the drop in Xinxiang Chemical's long position.The idea behind Shandong Intco Medical and Xinxiang Chemical Fiber 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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