Correlation Between Shandong Iron and Shaanxi Construction
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By analyzing existing cross correlation between Shandong Iron and and Shaanxi Construction Machinery, you can compare the effects of market volatilities on Shandong Iron and Shaanxi Construction 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 Shandong Iron with a short position of Shaanxi Construction. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shandong Iron and Shaanxi Construction.
Diversification Opportunities for Shandong Iron and Shaanxi Construction
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Shandong and Shaanxi is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Shandong Iron and and Shaanxi Construction Machinery in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shaanxi Construction and Shandong Iron 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 Shandong Iron and are associated (or correlated) with Shaanxi Construction. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shaanxi Construction has no effect on the direction of Shandong Iron i.e., Shandong Iron and Shaanxi Construction go up and down completely randomly.
Pair Corralation between Shandong Iron and Shaanxi Construction
Assuming the 90 days trading horizon Shandong Iron and is expected to generate 0.52 times more return on investment than Shaanxi Construction. However, Shandong Iron and is 1.93 times less risky than Shaanxi Construction. It trades about -0.01 of its potential returns per unit of risk. Shaanxi Construction Machinery is currently generating about -0.03 per unit of risk. If you would invest 150.00 in Shandong Iron and on October 14, 2024 and sell it today you would lose (17.00) from holding Shandong Iron and or give up 11.33% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Shandong Iron and vs. Shaanxi Construction Machinery
Performance |
| Timeline |
| Shandong Iron |
| Shaanxi Construction |
Shandong Iron and Shaanxi Construction Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shandong Iron and Shaanxi Construction
The main advantage of trading using opposite Shandong Iron and Shaanxi Construction positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shandong Iron position performs unexpectedly, Shaanxi Construction 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 Shaanxi Construction will offset losses from the drop in Shaanxi Construction's long position.| Shandong Iron vs. Tieling Newcity Investment | Shandong Iron vs. Jiangsu Yueda Investment | Shandong Iron vs. JCHX Mining Management | Shandong Iron vs. Chahua Modern Housewares |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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