Correlation Between Shenzhen Bioeasy and XiaMen HongXin
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By analyzing existing cross correlation between Shenzhen Bioeasy Biotechnology and XiaMen HongXin Electron tech, you can compare the effects of market volatilities on Shenzhen Bioeasy and XiaMen HongXin 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 Bioeasy with a short position of XiaMen HongXin. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shenzhen Bioeasy and XiaMen HongXin.
Diversification Opportunities for Shenzhen Bioeasy and XiaMen HongXin
0.25 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Shenzhen and XiaMen is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Shenzhen Bioeasy Biotechnology and XiaMen HongXin Electron tech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on XiaMen HongXin Electron and Shenzhen Bioeasy 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 Bioeasy Biotechnology are associated (or correlated) with XiaMen HongXin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of XiaMen HongXin Electron has no effect on the direction of Shenzhen Bioeasy i.e., Shenzhen Bioeasy and XiaMen HongXin go up and down completely randomly.
Pair Corralation between Shenzhen Bioeasy and XiaMen HongXin
Assuming the 90 days trading horizon Shenzhen Bioeasy Biotechnology is expected to under-perform the XiaMen HongXin. But the stock apears to be less risky and, when comparing its historical volatility, Shenzhen Bioeasy Biotechnology is 1.98 times less risky than XiaMen HongXin. The stock trades about 0.0 of its potential returns per unit of risk. The XiaMen HongXin Electron tech is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 1,945 in XiaMen HongXin Electron tech on November 7, 2024 and sell it today you would earn a total of 202.00 from holding XiaMen HongXin Electron tech or generate 10.39% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Shenzhen Bioeasy Biotechnology vs. XiaMen HongXin Electron tech
Performance |
| Timeline |
| Shenzhen Bioeasy Bio |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| XiaMen HongXin Electron |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Modest
Shenzhen Bioeasy and XiaMen HongXin Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shenzhen Bioeasy and XiaMen HongXin
The main advantage of trading using opposite Shenzhen Bioeasy and XiaMen HongXin positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shenzhen Bioeasy position performs unexpectedly, XiaMen HongXin 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 XiaMen HongXin will offset losses from the drop in XiaMen HongXin's long position.The idea behind Shenzhen Bioeasy Biotechnology and XiaMen HongXin Electron tech 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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