Correlation Between Shanghai Pudong and Aofu Environmental
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By analyzing existing cross correlation between Shanghai Pudong Development and Aofu Environmental Technology, you can compare the effects of market volatilities on Shanghai Pudong and Aofu Environmental 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 Aofu Environmental. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shanghai Pudong and Aofu Environmental.
Diversification Opportunities for Shanghai Pudong and Aofu Environmental
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Shanghai and Aofu is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Shanghai Pudong Development and Aofu Environmental Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aofu Environmental 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 Aofu Environmental. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aofu Environmental has no effect on the direction of Shanghai Pudong i.e., Shanghai Pudong and Aofu Environmental go up and down completely randomly.
Pair Corralation between Shanghai Pudong and Aofu Environmental
Assuming the 90 days trading horizon Shanghai Pudong is expected to generate 3.51 times less return on investment than Aofu Environmental. But when comparing it to its historical volatility, Shanghai Pudong Development is 1.93 times less risky than Aofu Environmental. It trades about 0.11 of its potential returns per unit of risk. Aofu Environmental Technology is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest 777.00 in Aofu Environmental Technology on September 2, 2024 and sell it today you would earn a total of 403.00 from holding Aofu Environmental Technology or generate 51.87% 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. Aofu Environmental Technology
Performance |
| Timeline |
| Shanghai Pudong Deve |
| Aofu Environmental |
Shanghai Pudong and Aofu Environmental Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shanghai Pudong and Aofu Environmental
The main advantage of trading using opposite Shanghai Pudong and Aofu Environmental positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shanghai Pudong position performs unexpectedly, Aofu Environmental 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 Aofu Environmental will offset losses from the drop in Aofu Environmental's long position.| Shanghai Pudong vs. Hainan Haiqi Transportation | Shanghai Pudong vs. Heilongjiang Transport Development | Shanghai Pudong vs. Broadex Technologies Co | Shanghai Pudong vs. Pengxin International Mining |
| Aofu Environmental vs. Zijin Mining Group | Aofu Environmental vs. Baoshan Iron Steel | Aofu Environmental vs. Shandong Gold Mining | Aofu Environmental vs. Rongsheng Petrochemical Co |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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