Correlation Between Fujian Wanchen and Shandong Sanyuan
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By analyzing existing cross correlation between Fujian Wanchen Biotechnology and Shandong Sanyuan Biotechnology, you can compare the effects of market volatilities on Fujian Wanchen and Shandong Sanyuan 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 Fujian Wanchen with a short position of Shandong Sanyuan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fujian Wanchen and Shandong Sanyuan.
Diversification Opportunities for Fujian Wanchen and Shandong Sanyuan
-0.42 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Fujian and Shandong is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Fujian Wanchen Biotechnology and Shandong Sanyuan Biotechnology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shandong Sanyuan Bio and Fujian Wanchen 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 Fujian Wanchen Biotechnology are associated (or correlated) with Shandong Sanyuan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shandong Sanyuan Bio has no effect on the direction of Fujian Wanchen i.e., Fujian Wanchen and Shandong Sanyuan go up and down completely randomly.
Pair Corralation between Fujian Wanchen and Shandong Sanyuan
Assuming the 90 days trading horizon Fujian Wanchen Biotechnology is expected to generate 2.69 times more return on investment than Shandong Sanyuan. However, Fujian Wanchen is 2.69 times more volatile than Shandong Sanyuan Biotechnology. It trades about 0.36 of its potential returns per unit of risk. Shandong Sanyuan Biotechnology is currently generating about 0.15 per unit of risk. If you would invest 7,895 in Fujian Wanchen Biotechnology on November 9, 2024 and sell it today you would earn a total of 1,904 from holding Fujian Wanchen Biotechnology or generate 24.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fujian Wanchen Biotechnology vs. Shandong Sanyuan Biotechnology
Performance |
| Timeline |
| Fujian Wanchen Biote |
Risk-Adjusted Performance
OK
Weak | Strong |
| Shandong Sanyuan Bio |
Risk-Adjusted Performance
Very Weak
Weak | Strong |
Fujian Wanchen and Shandong Sanyuan Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fujian Wanchen and Shandong Sanyuan
The main advantage of trading using opposite Fujian Wanchen and Shandong Sanyuan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fujian Wanchen position performs unexpectedly, Shandong Sanyuan 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 Sanyuan will offset losses from the drop in Shandong Sanyuan's long position.The idea behind Fujian Wanchen Biotechnology and Shandong Sanyuan Biotechnology 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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