Correlation Between Hubei Xingfa and Shandong Sanyuan
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By analyzing existing cross correlation between Hubei Xingfa Chemicals and Shandong Sanyuan Biotechnology, you can compare the effects of market volatilities on Hubei Xingfa and Shandong Sanyuan 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 Sanyuan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hubei Xingfa and Shandong Sanyuan.
Diversification Opportunities for Hubei Xingfa and Shandong Sanyuan
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Hubei and Shandong is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Hubei Xingfa Chemicals and Shandong Sanyuan Biotechnology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shandong Sanyuan 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 Sanyuan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shandong Sanyuan Bio has no effect on the direction of Hubei Xingfa i.e., Hubei Xingfa and Shandong Sanyuan go up and down completely randomly.
Pair Corralation between Hubei Xingfa and Shandong Sanyuan
Assuming the 90 days trading horizon Hubei Xingfa Chemicals is expected to generate 0.5 times more return on investment than Shandong Sanyuan. However, Hubei Xingfa Chemicals is 2.0 times less risky than Shandong Sanyuan. It trades about -0.32 of its potential returns per unit of risk. Shandong Sanyuan Biotechnology is currently generating about -0.27 per unit of risk. If you would invest 2,308 in Hubei Xingfa Chemicals on October 12, 2024 and sell it today you would lose (176.00) from holding Hubei Xingfa Chemicals or give up 7.63% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hubei Xingfa Chemicals vs. Shandong Sanyuan Biotechnology
Performance |
| Timeline |
| Hubei Xingfa Chemicals |
| Shandong Sanyuan Bio |
Hubei Xingfa and Shandong Sanyuan Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hubei Xingfa and Shandong Sanyuan
The main advantage of trading using opposite Hubei Xingfa and Shandong Sanyuan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hubei Xingfa position performs unexpectedly, Shandong Sanyuan 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 Sanyuan will offset losses from the drop in Shandong Sanyuan's long position.| Hubei Xingfa vs. Caihong Display Devices | Hubei Xingfa vs. Western Mining Co | Hubei Xingfa vs. Citic Offshore Helicopter | Hubei Xingfa vs. Jiugui Liquor Co |
| Shandong Sanyuan vs. Jinlong Machinery Electronic | Shandong Sanyuan vs. Dhc Software Co | Shandong Sanyuan vs. Hubei Xingfa Chemicals | Shandong Sanyuan vs. Sinofibers Technology Co |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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