Correlation Between Wuhan Yangtze and Shuhua Sports
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By analyzing existing cross correlation between Wuhan Yangtze Communication and Shuhua Sports Co, you can compare the effects of market volatilities on Wuhan Yangtze and Shuhua Sports 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 Shuhua Sports. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wuhan Yangtze and Shuhua Sports.
Diversification Opportunities for Wuhan Yangtze and Shuhua Sports
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Wuhan and Shuhua is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Wuhan Yangtze Communication and Shuhua Sports Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shuhua Sports 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 Shuhua Sports. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shuhua Sports has no effect on the direction of Wuhan Yangtze i.e., Wuhan Yangtze and Shuhua Sports go up and down completely randomly.
Pair Corralation between Wuhan Yangtze and Shuhua Sports
Assuming the 90 days trading horizon Wuhan Yangtze Communication is expected to generate 1.88 times more return on investment than Shuhua Sports. However, Wuhan Yangtze is 1.88 times more volatile than Shuhua Sports Co. It trades about 0.27 of its potential returns per unit of risk. Shuhua Sports Co is currently generating about 0.17 per unit of risk. If you would invest 1,511 in Wuhan Yangtze Communication on September 2, 2024 and sell it today you would earn a total of 1,458 from holding Wuhan Yangtze Communication or generate 96.49% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Wuhan Yangtze Communication vs. Shuhua Sports Co
Performance |
| Timeline |
| Wuhan Yangtze Commun |
| Shuhua Sports |
Wuhan Yangtze and Shuhua Sports Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wuhan Yangtze and Shuhua Sports
The main advantage of trading using opposite Wuhan Yangtze and Shuhua Sports positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wuhan Yangtze position performs unexpectedly, Shuhua Sports 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 Shuhua Sports will offset losses from the drop in Shuhua Sports' long position.| Wuhan Yangtze vs. Industrial and Commercial | Wuhan Yangtze vs. Kweichow Moutai Co | Wuhan Yangtze vs. Agricultural Bank of | Wuhan Yangtze vs. China Mobile Limited |
| Shuhua Sports vs. Nanjing Putian Telecommunications | Shuhua Sports vs. Shenzhen Hifuture Electric | Shuhua Sports vs. Tianjin Realty Development | Shuhua Sports vs. Shenyang Huitian Thermal |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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