Correlation Between ShuYu Civilian and Lianhe Chemical
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By analyzing existing cross correlation between ShuYu Civilian Pharmacy and Lianhe Chemical Technology, you can compare the effects of market volatilities on ShuYu Civilian and Lianhe 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 ShuYu Civilian with a short position of Lianhe Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of ShuYu Civilian and Lianhe Chemical.
Diversification Opportunities for ShuYu Civilian and Lianhe Chemical
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between ShuYu and Lianhe is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding ShuYu Civilian Pharmacy and Lianhe Chemical Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lianhe Chemical Tech and ShuYu Civilian 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 ShuYu Civilian Pharmacy are associated (or correlated) with Lianhe Chemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lianhe Chemical Tech has no effect on the direction of ShuYu Civilian i.e., ShuYu Civilian and Lianhe Chemical go up and down completely randomly.
Pair Corralation between ShuYu Civilian and Lianhe Chemical
Assuming the 90 days trading horizon ShuYu Civilian Pharmacy is expected to under-perform the Lianhe Chemical. But the stock apears to be less risky and, when comparing its historical volatility, ShuYu Civilian Pharmacy is 1.64 times less risky than Lianhe Chemical. The stock trades about -0.07 of its potential returns per unit of risk. The Lianhe Chemical Technology is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest 526.00 in Lianhe Chemical Technology on November 7, 2024 and sell it today you would earn a total of 69.00 from holding Lianhe Chemical Technology or generate 13.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
ShuYu Civilian Pharmacy vs. Lianhe Chemical Technology
Performance |
| Timeline |
| ShuYu Civilian Pharmacy |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Lianhe Chemical Tech |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
ShuYu Civilian and Lianhe Chemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ShuYu Civilian and Lianhe Chemical
The main advantage of trading using opposite ShuYu Civilian and Lianhe Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ShuYu Civilian position performs unexpectedly, Lianhe 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 Lianhe Chemical will offset losses from the drop in Lianhe Chemical's long position.The idea behind ShuYu Civilian Pharmacy and Lianhe Chemical Technology 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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