Correlation Between Wuhan Yangtze and Shantui Construction
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By analyzing existing cross correlation between Wuhan Yangtze Communication and Shantui Construction Machinery, you can compare the effects of market volatilities on Wuhan Yangtze and Shantui Construction 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 Wuhan Yangtze with a short position of Shantui Construction. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wuhan Yangtze and Shantui Construction.
Diversification Opportunities for Wuhan Yangtze and Shantui Construction
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Wuhan and Shantui is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Wuhan Yangtze Communication and Shantui Construction Machinery in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shantui Construction and Wuhan Yangtze 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 Wuhan Yangtze Communication are associated (or correlated) with Shantui Construction. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shantui Construction has no effect on the direction of Wuhan Yangtze i.e., Wuhan Yangtze and Shantui Construction go up and down completely randomly.
Pair Corralation between Wuhan Yangtze and Shantui Construction
Assuming the 90 days trading horizon Wuhan Yangtze is expected to generate 2.17 times less return on investment than Shantui Construction. In addition to that, Wuhan Yangtze is 1.24 times more volatile than Shantui Construction Machinery. It trades about 0.03 of its total potential returns per unit of risk. Shantui Construction Machinery is currently generating about 0.08 per unit of volatility. If you would invest 424.00 in Shantui Construction Machinery on October 14, 2024 and sell it today you would earn a total of 544.00 from holding Shantui Construction Machinery or generate 128.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Wuhan Yangtze Communication vs. Shantui Construction Machinery
Performance |
| Timeline |
| Wuhan Yangtze Commun |
| Shantui Construction |
Wuhan Yangtze and Shantui Construction Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wuhan Yangtze and Shantui Construction
The main advantage of trading using opposite Wuhan Yangtze and Shantui Construction positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wuhan Yangtze position performs unexpectedly, Shantui Construction 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 Shantui Construction will offset losses from the drop in Shantui Construction's long position.| Wuhan Yangtze vs. Chengdu Spaceon Electronics | Wuhan Yangtze vs. China Asset Management | Wuhan Yangtze vs. Ye Chiu Metal | Wuhan Yangtze vs. Huaxia Fund Management |
| Shantui Construction vs. Guangzhou Haige Communications | Shantui Construction vs. Peoples Insurance of | Shantui Construction vs. Wuhan Yangtze Communication | Shantui Construction vs. China Mobile Limited |
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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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