Correlation Between Shanghai Pudong and Fujian Longzhou
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By analyzing existing cross correlation between Shanghai Pudong Development and Fujian Longzhou Transportation, you can compare the effects of market volatilities on Shanghai Pudong and Fujian Longzhou 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 Fujian Longzhou. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shanghai Pudong and Fujian Longzhou.
Diversification Opportunities for Shanghai Pudong and Fujian Longzhou
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Shanghai and Fujian is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Shanghai Pudong Development and Fujian Longzhou Transportation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fujian Longzhou Tran 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 Fujian Longzhou. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fujian Longzhou Tran has no effect on the direction of Shanghai Pudong i.e., Shanghai Pudong and Fujian Longzhou go up and down completely randomly.
Pair Corralation between Shanghai Pudong and Fujian Longzhou
Assuming the 90 days trading horizon Shanghai Pudong Development is expected to generate 0.31 times more return on investment than Fujian Longzhou. However, Shanghai Pudong Development is 3.19 times less risky than Fujian Longzhou. It trades about 0.06 of its potential returns per unit of risk. Fujian Longzhou Transportation is currently generating about 0.02 per unit of risk. If you would invest 700.00 in Shanghai Pudong Development on August 30, 2024 and sell it today you would earn a total of 243.00 from holding Shanghai Pudong Development or generate 34.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Shanghai Pudong Development vs. Fujian Longzhou Transportation
Performance |
| Timeline |
| Shanghai Pudong Deve |
| Fujian Longzhou Tran |
Shanghai Pudong and Fujian Longzhou Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shanghai Pudong and Fujian Longzhou
The main advantage of trading using opposite Shanghai Pudong and Fujian Longzhou positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shanghai Pudong position performs unexpectedly, Fujian Longzhou 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 Fujian Longzhou will offset losses from the drop in Fujian Longzhou'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 |
| Fujian Longzhou vs. PetroChina Co Ltd | Fujian Longzhou vs. China State Construction | Fujian Longzhou vs. China Mobile Limited | Fujian Longzhou 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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