Correlation Between Chongqing Road and ShuYu Civilian
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By analyzing existing cross correlation between Chongqing Road Bridge and ShuYu Civilian Pharmacy, you can compare the effects of market volatilities on Chongqing Road and ShuYu Civilian 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 Chongqing Road with a short position of ShuYu Civilian. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chongqing Road and ShuYu Civilian.
Diversification Opportunities for Chongqing Road and ShuYu Civilian
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Chongqing and ShuYu is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Chongqing Road Bridge and ShuYu Civilian Pharmacy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ShuYu Civilian Pharmacy and Chongqing Road 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 Chongqing Road Bridge are associated (or correlated) with ShuYu Civilian. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ShuYu Civilian Pharmacy has no effect on the direction of Chongqing Road i.e., Chongqing Road and ShuYu Civilian go up and down completely randomly.
Pair Corralation between Chongqing Road and ShuYu Civilian
Assuming the 90 days trading horizon Chongqing Road Bridge is expected to generate 0.95 times more return on investment than ShuYu Civilian. However, Chongqing Road Bridge is 1.06 times less risky than ShuYu Civilian. It trades about 0.22 of its potential returns per unit of risk. ShuYu Civilian Pharmacy is currently generating about -0.07 per unit of risk. If you would invest 519.00 in Chongqing Road Bridge on November 7, 2024 and sell it today you would earn a total of 34.00 from holding Chongqing Road Bridge or generate 6.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Chongqing Road Bridge vs. ShuYu Civilian Pharmacy
Performance |
| Timeline |
| Chongqing Road Bridge |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| ShuYu Civilian Pharmacy |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Chongqing Road and ShuYu Civilian Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chongqing Road and ShuYu Civilian
The main advantage of trading using opposite Chongqing Road and ShuYu Civilian positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chongqing Road position performs unexpectedly, ShuYu Civilian 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 ShuYu Civilian will offset losses from the drop in ShuYu Civilian's long position.The idea behind Chongqing Road Bridge and ShuYu Civilian Pharmacy pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.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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