Correlation Between Shanghai Pudong and Dongnan Electronics
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By analyzing existing cross correlation between Shanghai Pudong Development and Dongnan Electronics Co, you can compare the effects of market volatilities on Shanghai Pudong and Dongnan Electronics 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 Dongnan Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shanghai Pudong and Dongnan Electronics.
Diversification Opportunities for Shanghai Pudong and Dongnan Electronics
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Shanghai and Dongnan is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Shanghai Pudong Development and Dongnan Electronics Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dongnan Electronics 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 Dongnan Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dongnan Electronics has no effect on the direction of Shanghai Pudong i.e., Shanghai Pudong and Dongnan Electronics go up and down completely randomly.
Pair Corralation between Shanghai Pudong and Dongnan Electronics
Assuming the 90 days trading horizon Shanghai Pudong Development is expected to generate 0.32 times more return on investment than Dongnan Electronics. However, Shanghai Pudong Development is 3.11 times less risky than Dongnan Electronics. It trades about 0.06 of its potential returns per unit of risk. Dongnan Electronics Co 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. Dongnan Electronics Co
Performance |
| Timeline |
| Shanghai Pudong Deve |
| Dongnan Electronics |
Shanghai Pudong and Dongnan Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shanghai Pudong and Dongnan Electronics
The main advantage of trading using opposite Shanghai Pudong and Dongnan Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shanghai Pudong position performs unexpectedly, Dongnan Electronics 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 Dongnan Electronics will offset losses from the drop in Dongnan Electronics' 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 |
| Dongnan Electronics vs. PetroChina Co Ltd | Dongnan Electronics vs. China State Construction | Dongnan Electronics vs. China Mobile Limited | Dongnan Electronics 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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