Correlation Between Nantong Jiangshan and Shandong Huifa
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By analyzing existing cross correlation between Nantong Jiangshan Agrochemical and Shandong Huifa Foodstuff, you can compare the effects of market volatilities on Nantong Jiangshan and Shandong Huifa 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 Nantong Jiangshan with a short position of Shandong Huifa. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nantong Jiangshan and Shandong Huifa.
Diversification Opportunities for Nantong Jiangshan and Shandong Huifa
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Nantong and Shandong is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Nantong Jiangshan Agrochemical and Shandong Huifa Foodstuff in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shandong Huifa Foodstuff and Nantong Jiangshan 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 Nantong Jiangshan Agrochemical are associated (or correlated) with Shandong Huifa. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shandong Huifa Foodstuff has no effect on the direction of Nantong Jiangshan i.e., Nantong Jiangshan and Shandong Huifa go up and down completely randomly.
Pair Corralation between Nantong Jiangshan and Shandong Huifa
Assuming the 90 days trading horizon Nantong Jiangshan Agrochemical is expected to under-perform the Shandong Huifa. But the stock apears to be less risky and, when comparing its historical volatility, Nantong Jiangshan Agrochemical is 1.61 times less risky than Shandong Huifa. The stock trades about -0.02 of its potential returns per unit of risk. The Shandong Huifa Foodstuff is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 776.00 in Shandong Huifa Foodstuff on September 4, 2024 and sell it today you would earn a total of 395.00 from holding Shandong Huifa Foodstuff or generate 50.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nantong Jiangshan Agrochemical vs. Shandong Huifa Foodstuff
Performance |
| Timeline |
| Nantong Jiangshan |
| Shandong Huifa Foodstuff |
Nantong Jiangshan and Shandong Huifa Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nantong Jiangshan and Shandong Huifa
The main advantage of trading using opposite Nantong Jiangshan and Shandong Huifa positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nantong Jiangshan position performs unexpectedly, Shandong Huifa 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 Shandong Huifa will offset losses from the drop in Shandong Huifa's long position.| Nantong Jiangshan vs. Zijin Mining Group | Nantong Jiangshan vs. Wanhua Chemical Group | Nantong Jiangshan vs. Baoshan Iron Steel | Nantong Jiangshan vs. Rongsheng Petrochemical Co |
| Shandong Huifa vs. Poly Real Estate | Shandong Huifa vs. China Vanke Co | Shandong Huifa vs. China Merchants Shekou | Shandong Huifa vs. Huafa Industrial 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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