Correlation Between State Grid and Weihai Honglin
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By analyzing existing cross correlation between State Grid InformationCommunication and Weihai Honglin Electronic, you can compare the effects of market volatilities on State Grid and Weihai Honglin 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 State Grid with a short position of Weihai Honglin. Check out your portfolio center. Please also check ongoing floating volatility patterns of State Grid and Weihai Honglin.
Diversification Opportunities for State Grid and Weihai Honglin
-0.62 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between State and Weihai is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding State Grid InformationCommunic and Weihai Honglin Electronic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Weihai Honglin Electronic and State Grid 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 State Grid InformationCommunication are associated (or correlated) with Weihai Honglin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Weihai Honglin Electronic has no effect on the direction of State Grid i.e., State Grid and Weihai Honglin go up and down completely randomly.
Pair Corralation between State Grid and Weihai Honglin
Assuming the 90 days trading horizon State Grid InformationCommunication is expected to generate 0.42 times more return on investment than Weihai Honglin. However, State Grid InformationCommunication is 2.39 times less risky than Weihai Honglin. It trades about 0.2 of its potential returns per unit of risk. Weihai Honglin Electronic is currently generating about 0.08 per unit of risk. If you would invest 1,780 in State Grid InformationCommunication on November 8, 2024 and sell it today you would earn a total of 104.00 from holding State Grid InformationCommunication or generate 5.84% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
State Grid InformationCommunic vs. Weihai Honglin Electronic
Performance |
| Timeline |
| State Grid Informati |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Weihai Honglin Electronic |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
OK
State Grid and Weihai Honglin Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with State Grid and Weihai Honglin
The main advantage of trading using opposite State Grid and Weihai Honglin positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if State Grid position performs unexpectedly, Weihai Honglin 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 Weihai Honglin will offset losses from the drop in Weihai Honglin's long position.The idea behind State Grid InformationCommunication and Weihai Honglin Electronic 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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