Correlation Between Shanghai Construction and Shanxi Lanhua
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By analyzing existing cross correlation between Shanghai Construction Group and Shanxi Lanhua Sci Tech, you can compare the effects of market volatilities on Shanghai Construction and Shanxi Lanhua 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 Lanhua. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shanghai Construction and Shanxi Lanhua.
Diversification Opportunities for Shanghai Construction and Shanxi Lanhua
0.1 | Correlation Coefficient |
Average diversification
The 3 months correlation between Shanghai and Shanxi is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Shanghai Construction Group and Shanxi Lanhua Sci Tech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shanxi Lanhua Sci 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 Lanhua. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shanxi Lanhua Sci has no effect on the direction of Shanghai Construction i.e., Shanghai Construction and Shanxi Lanhua go up and down completely randomly.
Pair Corralation between Shanghai Construction and Shanxi Lanhua
Assuming the 90 days trading horizon Shanghai Construction Group is expected to generate 0.82 times more return on investment than Shanxi Lanhua. However, Shanghai Construction Group is 1.22 times less risky than Shanxi Lanhua. It trades about 0.0 of its potential returns per unit of risk. Shanxi Lanhua Sci Tech is currently generating about -0.01 per unit of risk. If you would invest 257.00 in Shanghai Construction Group on October 14, 2024 and sell it today you would lose (14.00) from holding Shanghai Construction Group or give up 5.45% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Shanghai Construction Group vs. Shanxi Lanhua Sci Tech
Performance |
| Timeline |
| Shanghai Construction |
| Shanxi Lanhua Sci |
Shanghai Construction and Shanxi Lanhua Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shanghai Construction and Shanxi Lanhua
The main advantage of trading using opposite Shanghai Construction and Shanxi Lanhua positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shanghai Construction position performs unexpectedly, Shanxi Lanhua 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 Lanhua will offset losses from the drop in Shanxi Lanhua's long position.| Shanghai Construction vs. Agricultural Bank of | Shanghai Construction vs. Industrial and Commercial | Shanghai Construction vs. Bank of China | Shanghai Construction vs. PetroChina Co Ltd |
| Shanxi Lanhua vs. Unisplendour Corp | Shanxi Lanhua vs. Peoples Insurance of | Shanxi Lanhua vs. Shenwu Energy Saving | Shanxi Lanhua vs. Spring Airlines 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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