Correlation Between 516220 and Shandong Ruifeng
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By analyzing existing cross correlation between 516220 and Shandong Ruifeng Chemical, you can compare the effects of market volatilities on 516220 and Shandong Ruifeng 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 516220 with a short position of Shandong Ruifeng. Check out your portfolio center. Please also check ongoing floating volatility patterns of 516220 and Shandong Ruifeng.
Diversification Opportunities for 516220 and Shandong Ruifeng
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between 516220 and Shandong is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding 516220 and Shandong Ruifeng Chemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shandong Ruifeng Chemical and 516220 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 516220 are associated (or correlated) with Shandong Ruifeng. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shandong Ruifeng Chemical has no effect on the direction of 516220 i.e., 516220 and Shandong Ruifeng go up and down completely randomly.
Pair Corralation between 516220 and Shandong Ruifeng
Assuming the 90 days trading horizon 516220 is expected to generate 0.59 times more return on investment than Shandong Ruifeng. However, 516220 is 1.7 times less risky than Shandong Ruifeng. It trades about 0.08 of its potential returns per unit of risk. Shandong Ruifeng Chemical is currently generating about -0.05 per unit of risk. If you would invest 62.00 in 516220 on November 3, 2024 and sell it today you would earn a total of 1.00 from holding 516220 or generate 1.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
516220 vs. Shandong Ruifeng Chemical
Performance |
| Timeline |
| 516220 |
| Shandong Ruifeng Chemical |
516220 and Shandong Ruifeng Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with 516220 and Shandong Ruifeng
The main advantage of trading using opposite 516220 and Shandong Ruifeng positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 516220 position performs unexpectedly, Shandong Ruifeng 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 Ruifeng will offset losses from the drop in Shandong Ruifeng's long position.The idea behind 516220 and Shandong Ruifeng Chemical 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.| Shandong Ruifeng vs. Zhejiang Qianjiang Motorcycle | Shandong Ruifeng vs. Cansino Biologics | Shandong Ruifeng vs. Dongfeng Automobile Co | Shandong Ruifeng vs. Chongqing Shunbo Aluminum |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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