Correlation Between Weihai Honglin and Shanxi Xishan
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By analyzing existing cross correlation between Weihai Honglin Electronic and Shanxi Xishan Coal, you can compare the effects of market volatilities on Weihai Honglin and Shanxi Xishan 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 Weihai Honglin with a short position of Shanxi Xishan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Weihai Honglin and Shanxi Xishan.
Diversification Opportunities for Weihai Honglin and Shanxi Xishan
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Weihai and Shanxi is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Weihai Honglin Electronic and Shanxi Xishan Coal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shanxi Xishan Coal and Weihai Honglin 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 Weihai Honglin Electronic are associated (or correlated) with Shanxi Xishan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shanxi Xishan Coal has no effect on the direction of Weihai Honglin i.e., Weihai Honglin and Shanxi Xishan go up and down completely randomly.
Pair Corralation between Weihai Honglin and Shanxi Xishan
Assuming the 90 days trading horizon Weihai Honglin Electronic is expected to generate 1.5 times more return on investment than Shanxi Xishan. However, Weihai Honglin is 1.5 times more volatile than Shanxi Xishan Coal. It trades about 0.01 of its potential returns per unit of risk. Shanxi Xishan Coal is currently generating about -0.06 per unit of risk. If you would invest 1,366 in Weihai Honglin Electronic on September 3, 2024 and sell it today you would earn a total of 3.00 from holding Weihai Honglin Electronic or generate 0.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Weihai Honglin Electronic vs. Shanxi Xishan Coal
Performance |
| Timeline |
| Weihai Honglin Electronic |
| Shanxi Xishan Coal |
Weihai Honglin and Shanxi Xishan Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Weihai Honglin and Shanxi Xishan
The main advantage of trading using opposite Weihai Honglin and Shanxi Xishan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Weihai Honglin position performs unexpectedly, Shanxi Xishan 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 Shanxi Xishan will offset losses from the drop in Shanxi Xishan's long position.| Weihai Honglin vs. Cultural Investment Holdings | Weihai Honglin vs. Gome Telecom Equipment | Weihai Honglin vs. Bus Online Co | Weihai Honglin vs. Holitech Technology Co |
| Shanxi Xishan vs. Weihai Honglin Electronic | Shanxi Xishan vs. Dongnan Electronics Co | Shanxi Xishan vs. Qumei Furniture Group | Shanxi Xishan vs. Easyhome New Retail |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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