Correlation Between Chengdu Kanghua and Shenzhen SDG
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By analyzing existing cross correlation between Chengdu Kanghua Biological and Shenzhen SDG Service, you can compare the effects of market volatilities on Chengdu Kanghua and Shenzhen SDG 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 Chengdu Kanghua with a short position of Shenzhen SDG. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chengdu Kanghua and Shenzhen SDG.
Diversification Opportunities for Chengdu Kanghua and Shenzhen SDG
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Chengdu and Shenzhen is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Chengdu Kanghua Biological and Shenzhen SDG Service in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shenzhen SDG Service and Chengdu Kanghua 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 Chengdu Kanghua Biological are associated (or correlated) with Shenzhen SDG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shenzhen SDG Service has no effect on the direction of Chengdu Kanghua i.e., Chengdu Kanghua and Shenzhen SDG go up and down completely randomly.
Pair Corralation between Chengdu Kanghua and Shenzhen SDG
Assuming the 90 days trading horizon Chengdu Kanghua Biological is expected to under-perform the Shenzhen SDG. But the stock apears to be less risky and, when comparing its historical volatility, Chengdu Kanghua Biological is 1.79 times less risky than Shenzhen SDG. The stock trades about -0.32 of its potential returns per unit of risk. The Shenzhen SDG Service is currently generating about -0.14 of returns per unit of risk over similar time horizon. If you would invest 5,171 in Shenzhen SDG Service on October 28, 2024 and sell it today you would lose (514.00) from holding Shenzhen SDG Service or give up 9.94% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Chengdu Kanghua Biological vs. Shenzhen SDG Service
Performance |
| Timeline |
| Chengdu Kanghua Biol |
| Shenzhen SDG Service |
Chengdu Kanghua and Shenzhen SDG Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chengdu Kanghua and Shenzhen SDG
The main advantage of trading using opposite Chengdu Kanghua and Shenzhen SDG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chengdu Kanghua position performs unexpectedly, Shenzhen SDG 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 SDG will offset losses from the drop in Shenzhen SDG's long position.| Chengdu Kanghua vs. Liaoning Dingjide Petrochemical | Chengdu Kanghua vs. Daoming OpticsChemical Co | Chengdu Kanghua vs. Guangzhou Jointas Chemical | Chengdu Kanghua vs. Do Fluoride Chemicals Co |
| Shenzhen SDG vs. Agricultural Bank of | Shenzhen SDG vs. Industrial and Commercial | Shenzhen SDG vs. Bank of China | Shenzhen SDG vs. China Construction Bank |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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