Correlation Between Shanxi Lanhua and Kunwu Jiuding
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By analyzing existing cross correlation between Shanxi Lanhua Sci Tech and Kunwu Jiuding Investment, you can compare the effects of market volatilities on Shanxi Lanhua and Kunwu Jiuding 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 Shanxi Lanhua with a short position of Kunwu Jiuding. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shanxi Lanhua and Kunwu Jiuding.
Diversification Opportunities for Shanxi Lanhua and Kunwu Jiuding
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Shanxi and Kunwu is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Shanxi Lanhua Sci Tech and Kunwu Jiuding Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kunwu Jiuding Investment and Shanxi Lanhua 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 Shanxi Lanhua Sci Tech are associated (or correlated) with Kunwu Jiuding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kunwu Jiuding Investment has no effect on the direction of Shanxi Lanhua i.e., Shanxi Lanhua and Kunwu Jiuding go up and down completely randomly.
Pair Corralation between Shanxi Lanhua and Kunwu Jiuding
Assuming the 90 days trading horizon Shanxi Lanhua Sci Tech is expected to under-perform the Kunwu Jiuding. But the stock apears to be less risky and, when comparing its historical volatility, Shanxi Lanhua Sci Tech is 1.72 times less risky than Kunwu Jiuding. The stock trades about 0.0 of its potential returns per unit of risk. The Kunwu Jiuding Investment is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest 1,818 in Kunwu Jiuding Investment on September 21, 2024 and sell it today you would lose (288.00) from holding Kunwu Jiuding Investment or give up 15.84% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Shanxi Lanhua Sci Tech vs. Kunwu Jiuding Investment
Performance |
| Timeline |
| Shanxi Lanhua Sci |
| Kunwu Jiuding Investment |
Shanxi Lanhua and Kunwu Jiuding Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shanxi Lanhua and Kunwu Jiuding
The main advantage of trading using opposite Shanxi Lanhua and Kunwu Jiuding positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shanxi Lanhua position performs unexpectedly, Kunwu Jiuding 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 Kunwu Jiuding will offset losses from the drop in Kunwu Jiuding's long position.| Shanxi Lanhua vs. Tongyu Communication | Shanxi Lanhua vs. Guangdong Shenglu Telecommunication | Shanxi Lanhua vs. Xinjiang Communications Construction | Shanxi Lanhua vs. Zhongshan Public Utilities |
| Kunwu Jiuding vs. Ningbo Construction Co | Kunwu Jiuding vs. Shanghai Construction Group | Kunwu Jiuding vs. Hunan Tyen Machinery | Kunwu Jiuding vs. Hefei Metalforming Mach |
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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