Correlation Between Chongqing Road and Shanghai Yanpu
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By analyzing existing cross correlation between Chongqing Road Bridge and Shanghai Yanpu Metal, you can compare the effects of market volatilities on Chongqing Road and Shanghai Yanpu 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 Shanghai Yanpu. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chongqing Road and Shanghai Yanpu.
Diversification Opportunities for Chongqing Road and Shanghai Yanpu
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Chongqing and Shanghai is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Chongqing Road Bridge and Shanghai Yanpu Metal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shanghai Yanpu Metal 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 Shanghai Yanpu. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shanghai Yanpu Metal has no effect on the direction of Chongqing Road i.e., Chongqing Road and Shanghai Yanpu go up and down completely randomly.
Pair Corralation between Chongqing Road and Shanghai Yanpu
Assuming the 90 days trading horizon Chongqing Road Bridge is expected to under-perform the Shanghai Yanpu. In addition to that, Chongqing Road is 1.06 times more volatile than Shanghai Yanpu Metal. It trades about -0.08 of its total potential returns per unit of risk. Shanghai Yanpu Metal is currently generating about 0.1 per unit of volatility. If you would invest 3,800 in Shanghai Yanpu Metal on August 31, 2024 and sell it today you would earn a total of 238.00 from holding Shanghai Yanpu Metal or generate 6.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Chongqing Road Bridge vs. Shanghai Yanpu Metal
Performance |
| Timeline |
| Chongqing Road Bridge |
| Shanghai Yanpu Metal |
Chongqing Road and Shanghai Yanpu Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chongqing Road and Shanghai Yanpu
The main advantage of trading using opposite Chongqing Road and Shanghai Yanpu positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chongqing Road position performs unexpectedly, Shanghai Yanpu 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 Shanghai Yanpu will offset losses from the drop in Shanghai Yanpu's long position.| Chongqing Road vs. Cultural Investment Holdings | Chongqing Road vs. Gome Telecom Equipment | Chongqing Road vs. Bus Online Co | Chongqing Road vs. Holitech Technology Co |
| Shanghai Yanpu vs. China State Construction | Shanghai Yanpu vs. China Merchants Shekou | Shanghai Yanpu vs. Huafa Industrial Co | Shanghai Yanpu vs. China International Capital |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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