Correlation Between Anhui Jianghuai and Shaanxi Beiyuan
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By analyzing existing cross correlation between Anhui Jianghuai Automobile and Shaanxi Beiyuan Chemical, you can compare the effects of market volatilities on Anhui Jianghuai and Shaanxi Beiyuan 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 Anhui Jianghuai with a short position of Shaanxi Beiyuan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Anhui Jianghuai and Shaanxi Beiyuan.
Diversification Opportunities for Anhui Jianghuai and Shaanxi Beiyuan
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Anhui and Shaanxi is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Anhui Jianghuai Automobile and Shaanxi Beiyuan Chemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shaanxi Beiyuan Chemical and Anhui Jianghuai 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 Anhui Jianghuai Automobile are associated (or correlated) with Shaanxi Beiyuan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shaanxi Beiyuan Chemical has no effect on the direction of Anhui Jianghuai i.e., Anhui Jianghuai and Shaanxi Beiyuan go up and down completely randomly.
Pair Corralation between Anhui Jianghuai and Shaanxi Beiyuan
Assuming the 90 days trading horizon Anhui Jianghuai Automobile is expected to generate 2.41 times more return on investment than Shaanxi Beiyuan. However, Anhui Jianghuai is 2.41 times more volatile than Shaanxi Beiyuan Chemical. It trades about 0.22 of its potential returns per unit of risk. Shaanxi Beiyuan Chemical is currently generating about 0.21 per unit of risk. If you would invest 2,225 in Anhui Jianghuai Automobile on September 12, 2024 and sell it today you would earn a total of 1,428 from holding Anhui Jianghuai Automobile or generate 64.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 98.28% |
| Values | Daily Returns |
Anhui Jianghuai Automobile vs. Shaanxi Beiyuan Chemical
Performance |
| Timeline |
| Anhui Jianghuai Auto |
| Shaanxi Beiyuan Chemical |
Anhui Jianghuai and Shaanxi Beiyuan Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Anhui Jianghuai and Shaanxi Beiyuan
The main advantage of trading using opposite Anhui Jianghuai and Shaanxi Beiyuan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Anhui Jianghuai position performs unexpectedly, Shaanxi Beiyuan 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 Shaanxi Beiyuan will offset losses from the drop in Shaanxi Beiyuan's long position.| Anhui Jianghuai vs. Beijing Sanyuan Foods | Anhui Jianghuai vs. Sichuan Fulin Transportation | Anhui Jianghuai vs. Dazhong Transportation Group | Anhui Jianghuai vs. Shandong Huifa Foodstuff |
| Shaanxi Beiyuan vs. HUAQIN TECHNOLOGY LTD | Shaanxi Beiyuan vs. Jinhe Biotechnology Co | Shaanxi Beiyuan vs. Shaanxi Energy Investment | Shaanxi Beiyuan vs. Zhejiang Construction Investment |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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