Correlation Between Shanghai Construction and Shanxi Xishan
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By analyzing existing cross correlation between Shanghai Construction Group and Shanxi Xishan Coal, you can compare the effects of market volatilities on Shanghai Construction and Shanxi Xishan 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 Shanghai Construction with a short position of Shanxi Xishan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shanghai Construction and Shanxi Xishan.
Diversification Opportunities for Shanghai Construction and Shanxi Xishan
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Shanghai and Shanxi is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Shanghai Construction Group and Shanxi Xishan Coal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shanxi Xishan Coal and Shanghai Construction 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 Shanghai Construction Group are associated (or correlated) with Shanxi Xishan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shanxi Xishan Coal has no effect on the direction of Shanghai Construction i.e., Shanghai Construction and Shanxi Xishan go up and down completely randomly.
Pair Corralation between Shanghai Construction and Shanxi Xishan
Assuming the 90 days trading horizon Shanghai Construction Group is expected to generate 1.79 times more return on investment than Shanxi Xishan. However, Shanghai Construction is 1.79 times more volatile than Shanxi Xishan Coal. It trades about 0.08 of its potential returns per unit of risk. Shanxi Xishan Coal is currently generating about -0.48 per unit of risk. If you would invest 249.00 in Shanghai Construction Group on November 27, 2024 and sell it today you would earn a total of 4.00 from holding Shanghai Construction Group or generate 1.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Shanghai Construction Group vs. Shanxi Xishan Coal
Performance |
| Timeline |
| Shanghai Construction |
| Shanxi Xishan Coal |
Shanghai Construction and Shanxi Xishan Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shanghai Construction and Shanxi Xishan
The main advantage of trading using opposite Shanghai Construction and Shanxi Xishan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shanghai Construction position performs unexpectedly, Shanxi Xishan 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 Shanxi Xishan will offset losses from the drop in Shanxi Xishan's long position.| Shanghai Construction vs. Jilin Jlu Communication | Shanghai Construction vs. Xinxiang Chemical Fiber | Shanghai Construction vs. Unisplendour Corp | Shanghai Construction vs. Lier Chemical Co |
| Shanxi Xishan vs. Shanghai CEO Environmental | Shanxi Xishan vs. SI TECH Information Technology | Shanxi Xishan vs. Chengdu Spaceon Electronics | Shanxi Xishan vs. Nsfocus Information Technology |
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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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