Correlation Between Hubei Xingfa and Shandong Polymer
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By analyzing existing cross correlation between Hubei Xingfa Chemicals and Shandong Polymer Biochemicals, you can compare the effects of market volatilities on Hubei Xingfa and Shandong Polymer 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 Hubei Xingfa with a short position of Shandong Polymer. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hubei Xingfa and Shandong Polymer.
Diversification Opportunities for Hubei Xingfa and Shandong Polymer
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Hubei and Shandong is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Hubei Xingfa Chemicals and Shandong Polymer Biochemicals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shandong Polymer Bio and Hubei Xingfa 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 Hubei Xingfa Chemicals are associated (or correlated) with Shandong Polymer. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shandong Polymer Bio has no effect on the direction of Hubei Xingfa i.e., Hubei Xingfa and Shandong Polymer go up and down completely randomly.
Pair Corralation between Hubei Xingfa and Shandong Polymer
Assuming the 90 days trading horizon Hubei Xingfa is expected to generate 6.29 times less return on investment than Shandong Polymer. But when comparing it to its historical volatility, Hubei Xingfa Chemicals is 1.44 times less risky than Shandong Polymer. It trades about 0.03 of its potential returns per unit of risk. Shandong Polymer Biochemicals is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 401.00 in Shandong Polymer Biochemicals on August 25, 2024 and sell it today you would earn a total of 44.00 from holding Shandong Polymer Biochemicals or generate 10.97% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hubei Xingfa Chemicals vs. Shandong Polymer Biochemicals
Performance |
| Timeline |
| Hubei Xingfa Chemicals |
| Shandong Polymer Bio |
Hubei Xingfa and Shandong Polymer Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hubei Xingfa and Shandong Polymer
The main advantage of trading using opposite Hubei Xingfa and Shandong Polymer positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hubei Xingfa position performs unexpectedly, Shandong Polymer 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 Shandong Polymer will offset losses from the drop in Shandong Polymer's long position.| Hubei Xingfa vs. Guangzhou Ruoyuchen Information | Hubei Xingfa vs. Northking Information Technology | Hubei Xingfa vs. Tonghua Grape Wine | Hubei Xingfa vs. Xiamen Goldenhome Co |
| Shandong Polymer vs. Zijin Mining Group | Shandong Polymer vs. Wanhua Chemical Group | Shandong Polymer vs. Shandong Gold Mining | Shandong Polymer vs. Inner Mongolia BaoTou |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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