Correlation Between Inner Mongolia and Shandong Hongchuang
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By analyzing existing cross correlation between Inner Mongolia BaoTou and Shandong Hongchuang Aluminum, you can compare the effects of market volatilities on Inner Mongolia and Shandong Hongchuang 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 Inner Mongolia with a short position of Shandong Hongchuang. Check out your portfolio center. Please also check ongoing floating volatility patterns of Inner Mongolia and Shandong Hongchuang.
Diversification Opportunities for Inner Mongolia and Shandong Hongchuang
0.19 | Correlation Coefficient |
Average diversification
The 3 months correlation between Inner and Shandong is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Inner Mongolia BaoTou and Shandong Hongchuang Aluminum in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shandong Hongchuang and Inner Mongolia 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 Inner Mongolia BaoTou are associated (or correlated) with Shandong Hongchuang. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shandong Hongchuang has no effect on the direction of Inner Mongolia i.e., Inner Mongolia and Shandong Hongchuang go up and down completely randomly.
Pair Corralation between Inner Mongolia and Shandong Hongchuang
Assuming the 90 days trading horizon Inner Mongolia BaoTou is expected to under-perform the Shandong Hongchuang. But the stock apears to be less risky and, when comparing its historical volatility, Inner Mongolia BaoTou is 2.86 times less risky than Shandong Hongchuang. The stock trades about -0.2 of its potential returns per unit of risk. The Shandong Hongchuang Aluminum is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest 821.00 in Shandong Hongchuang Aluminum on October 18, 2024 and sell it today you would earn a total of 123.00 from holding Shandong Hongchuang Aluminum or generate 14.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.24% |
| Values | Daily Returns |
Inner Mongolia BaoTou vs. Shandong Hongchuang Aluminum
Performance |
| Timeline |
| Inner Mongolia BaoTou |
| Shandong Hongchuang |
Inner Mongolia and Shandong Hongchuang Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Inner Mongolia and Shandong Hongchuang
The main advantage of trading using opposite Inner Mongolia and Shandong Hongchuang positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Inner Mongolia position performs unexpectedly, Shandong Hongchuang 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 Hongchuang will offset losses from the drop in Shandong Hongchuang's long position.| Inner Mongolia vs. Nexchip Semiconductor Corp | Inner Mongolia vs. Puya Semiconductor Shanghai | Inner Mongolia vs. StarPower Semiconductor | Inner Mongolia vs. Dawning Information Industry |
| Shandong Hongchuang vs. Qiaoyin Environmental Tech | Shandong Hongchuang vs. Citic Offshore Helicopter | Shandong Hongchuang vs. Jinling Hotel Corp | Shandong Hongchuang vs. Eit Environmental Development |
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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