Correlation Between Hubei Xingfa and Suzhou Fushilai
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By analyzing existing cross correlation between Hubei Xingfa Chemicals and Suzhou Fushilai Pharmaceutical, you can compare the effects of market volatilities on Hubei Xingfa and Suzhou Fushilai 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 Suzhou Fushilai. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hubei Xingfa and Suzhou Fushilai.
Diversification Opportunities for Hubei Xingfa and Suzhou Fushilai
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Hubei and Suzhou is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Hubei Xingfa Chemicals and Suzhou Fushilai Pharmaceutical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Suzhou Fushilai Phar 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 Suzhou Fushilai. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Suzhou Fushilai Phar has no effect on the direction of Hubei Xingfa i.e., Hubei Xingfa and Suzhou Fushilai go up and down completely randomly.
Pair Corralation between Hubei Xingfa and Suzhou Fushilai
Assuming the 90 days trading horizon Hubei Xingfa Chemicals is expected to generate 0.93 times more return on investment than Suzhou Fushilai. However, Hubei Xingfa Chemicals is 1.07 times less risky than Suzhou Fushilai. It trades about -0.09 of its potential returns per unit of risk. Suzhou Fushilai Pharmaceutical is currently generating about -0.2 per unit of risk. If you would invest 2,218 in Hubei Xingfa Chemicals on October 25, 2024 and sell it today you would lose (81.00) from holding Hubei Xingfa Chemicals or give up 3.65% 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. Suzhou Fushilai Pharmaceutical
Performance |
| Timeline |
| Hubei Xingfa Chemicals |
| Suzhou Fushilai Phar |
Hubei Xingfa and Suzhou Fushilai Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hubei Xingfa and Suzhou Fushilai
The main advantage of trading using opposite Hubei Xingfa and Suzhou Fushilai positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hubei Xingfa position performs unexpectedly, Suzhou Fushilai 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 Suzhou Fushilai will offset losses from the drop in Suzhou Fushilai's long position.| Hubei Xingfa vs. Zijin Mining Group | Hubei Xingfa vs. Wanhua Chemical Group | Hubei Xingfa vs. Baoshan Iron Steel | Hubei Xingfa vs. Rongsheng Petrochemical Co |
| Suzhou Fushilai vs. Xiangyang Automobile Bearing | Suzhou Fushilai vs. CareRay Digital Medical | Suzhou Fushilai vs. Fiberhome Telecommunication Technologies | Suzhou Fushilai vs. Zhongzhu Medical Holdings |
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