Correlation Between Shandong Iron and Allied Machinery
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By analyzing existing cross correlation between Shandong Iron and and Allied Machinery Co, you can compare the effects of market volatilities on Shandong Iron and Allied Machinery 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 Allied Machinery. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shandong Iron and Allied Machinery.
Diversification Opportunities for Shandong Iron and Allied Machinery
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Shandong and Allied is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Shandong Iron and and Allied Machinery Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Allied Machinery 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 Allied Machinery. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Allied Machinery has no effect on the direction of Shandong Iron i.e., Shandong Iron and Allied Machinery go up and down completely randomly.
Pair Corralation between Shandong Iron and Allied Machinery
Assuming the 90 days trading horizon Shandong Iron and is expected to generate 1.13 times more return on investment than Allied Machinery. However, Shandong Iron is 1.13 times more volatile than Allied Machinery Co. It trades about 0.13 of its potential returns per unit of risk. Allied Machinery Co is currently generating about 0.04 per unit of risk. If you would invest 157.00 in Shandong Iron and on September 14, 2024 and sell it today you would earn a total of 10.00 from holding Shandong Iron and or generate 6.37% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Shandong Iron and vs. Allied Machinery Co
Performance |
| Timeline |
| Shandong Iron |
| Allied Machinery |
Shandong Iron and Allied Machinery Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shandong Iron and Allied Machinery
The main advantage of trading using opposite Shandong Iron and Allied Machinery positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shandong Iron position performs unexpectedly, Allied Machinery 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 Allied Machinery will offset losses from the drop in Allied Machinery's long position.| Shandong Iron vs. Allied Machinery Co | Shandong Iron vs. Tengda Construction Group | Shandong Iron vs. Tsingtao Brewery Co | Shandong Iron vs. China Life Insurance |
| Allied Machinery vs. Industrial and Commercial | Allied Machinery vs. Kweichow Moutai Co | Allied Machinery vs. Agricultural Bank of | Allied Machinery vs. China Mobile Limited |
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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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