Correlation Between Super Dragon and China Building
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By analyzing existing cross correlation between Super Dragon Engineering Plastics and China Building Material, you can compare the effects of market volatilities on Super Dragon and China Building 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 Super Dragon with a short position of China Building. Check out your portfolio center. Please also check ongoing floating volatility patterns of Super Dragon and China Building.
Diversification Opportunities for Super Dragon and China Building
0.14 | Correlation Coefficient |
Average diversification
The 3 months correlation between Super and China is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Super Dragon Engineering Plast and China Building Material in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Building Material and Super Dragon 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 Super Dragon Engineering Plastics are associated (or correlated) with China Building. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Building Material has no effect on the direction of Super Dragon i.e., Super Dragon and China Building go up and down completely randomly.
Pair Corralation between Super Dragon and China Building
Assuming the 90 days trading horizon Super Dragon Engineering Plastics is expected to generate 0.67 times more return on investment than China Building. However, Super Dragon Engineering Plastics is 1.49 times less risky than China Building. It trades about 0.01 of its potential returns per unit of risk. China Building Material is currently generating about -0.08 per unit of risk. If you would invest 4,220 in Super Dragon Engineering Plastics on November 9, 2024 and sell it today you would lose (614.00) from holding Super Dragon Engineering Plastics or give up 14.55% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 18.53% |
| Values | Daily Returns |
Super Dragon Engineering Plast vs. China Building Material
Performance |
| Timeline |
| Super Dragon Enginee |
Risk-Adjusted Performance
Very Weak
Weak | Strong |
| China Building Material |
Risk-Adjusted Performance
Excellent
Weak | Strong |
Super Dragon and China Building Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Super Dragon and China Building
The main advantage of trading using opposite Super Dragon and China Building positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Super Dragon position performs unexpectedly, China Building 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 China Building will offset losses from the drop in China Building's long position.The idea behind Super Dragon Engineering Plastics and China Building Material 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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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