Correlation Between Shanghai Pudong and Xinjiang Beixin
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By analyzing existing cross correlation between Shanghai Pudong Development and Xinjiang Beixin RoadBridge, you can compare the effects of market volatilities on Shanghai Pudong and Xinjiang Beixin 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 Shanghai Pudong with a short position of Xinjiang Beixin. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shanghai Pudong and Xinjiang Beixin.
Diversification Opportunities for Shanghai Pudong and Xinjiang Beixin
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Shanghai and Xinjiang is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Shanghai Pudong Development and Xinjiang Beixin RoadBridge in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xinjiang Beixin Road and Shanghai Pudong 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 Shanghai Pudong Development are associated (or correlated) with Xinjiang Beixin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xinjiang Beixin Road has no effect on the direction of Shanghai Pudong i.e., Shanghai Pudong and Xinjiang Beixin go up and down completely randomly.
Pair Corralation between Shanghai Pudong and Xinjiang Beixin
Assuming the 90 days trading horizon Shanghai Pudong Development is expected to under-perform the Xinjiang Beixin. But the stock apears to be less risky and, when comparing its historical volatility, Shanghai Pudong Development is 2.41 times less risky than Xinjiang Beixin. The stock trades about -0.22 of its potential returns per unit of risk. The Xinjiang Beixin RoadBridge is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 362.00 in Xinjiang Beixin RoadBridge on August 29, 2024 and sell it today you would earn a total of 34.00 from holding Xinjiang Beixin RoadBridge or generate 9.39% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Shanghai Pudong Development vs. Xinjiang Beixin RoadBridge
Performance |
| Timeline |
| Shanghai Pudong Deve |
| Xinjiang Beixin Road |
Shanghai Pudong and Xinjiang Beixin Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shanghai Pudong and Xinjiang Beixin
The main advantage of trading using opposite Shanghai Pudong and Xinjiang Beixin positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shanghai Pudong position performs unexpectedly, Xinjiang Beixin 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 Xinjiang Beixin will offset losses from the drop in Xinjiang Beixin's long position.| Shanghai Pudong vs. Hang Xiao Steel | Shanghai Pudong vs. Gansu Jiu Steel | Shanghai Pudong vs. Tianjin Capital Environmental | Shanghai Pudong vs. Eit Environmental Development |
| Xinjiang Beixin vs. PetroChina Co Ltd | Xinjiang Beixin vs. China State Construction | Xinjiang Beixin vs. China Mobile Limited | Xinjiang Beixin vs. Industrial and Commercial |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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