Correlation Between Hubei Xingfa and Suzhou Novoprotein
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By analyzing existing cross correlation between Hubei Xingfa Chemicals and Suzhou Novoprotein Scientific, you can compare the effects of market volatilities on Hubei Xingfa and Suzhou Novoprotein 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 Novoprotein. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hubei Xingfa and Suzhou Novoprotein.
Diversification Opportunities for Hubei Xingfa and Suzhou Novoprotein
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Hubei and Suzhou is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Hubei Xingfa Chemicals and Suzhou Novoprotein Scientific in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Suzhou Novoprotein 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 Novoprotein. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Suzhou Novoprotein has no effect on the direction of Hubei Xingfa i.e., Hubei Xingfa and Suzhou Novoprotein go up and down completely randomly.
Pair Corralation between Hubei Xingfa and Suzhou Novoprotein
Assuming the 90 days trading horizon Hubei Xingfa Chemicals is expected to generate 1.49 times more return on investment than Suzhou Novoprotein. However, Hubei Xingfa is 1.49 times more volatile than Suzhou Novoprotein Scientific. It trades about 0.04 of its potential returns per unit of risk. Suzhou Novoprotein Scientific is currently generating about -0.06 per unit of risk. If you would invest 2,122 in Hubei Xingfa Chemicals on November 9, 2024 and sell it today you would earn a total of 23.00 from holding Hubei Xingfa Chemicals or generate 1.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hubei Xingfa Chemicals vs. Suzhou Novoprotein Scientific
Performance |
| Timeline |
| Hubei Xingfa Chemicals |
Risk-Adjusted Performance
Very Weak
Weak | Strong |
| Suzhou Novoprotein |
Risk-Adjusted Performance
Very Weak
Weak | Strong |
Hubei Xingfa and Suzhou Novoprotein Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hubei Xingfa and Suzhou Novoprotein
The main advantage of trading using opposite Hubei Xingfa and Suzhou Novoprotein positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hubei Xingfa position performs unexpectedly, Suzhou Novoprotein 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 Novoprotein will offset losses from the drop in Suzhou Novoprotein's long position.The idea behind Hubei Xingfa Chemicals and Suzhou Novoprotein Scientific 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.
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