Correlation Between Anhui Jianghuai and Zhengzhou Coal
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By analyzing existing cross correlation between Anhui Jianghuai Automobile and Zhengzhou Coal Mining, you can compare the effects of market volatilities on Anhui Jianghuai and Zhengzhou Coal 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 Zhengzhou Coal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Anhui Jianghuai and Zhengzhou Coal.
Diversification Opportunities for Anhui Jianghuai and Zhengzhou Coal
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Anhui and Zhengzhou is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Anhui Jianghuai Automobile and Zhengzhou Coal Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zhengzhou Coal Mining 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 Zhengzhou Coal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zhengzhou Coal Mining has no effect on the direction of Anhui Jianghuai i.e., Anhui Jianghuai and Zhengzhou Coal go up and down completely randomly.
Pair Corralation between Anhui Jianghuai and Zhengzhou Coal
Assuming the 90 days trading horizon Anhui Jianghuai Automobile is expected to generate 1.55 times more return on investment than Zhengzhou Coal. However, Anhui Jianghuai is 1.55 times more volatile than Zhengzhou Coal Mining. It trades about 0.22 of its potential returns per unit of risk. Zhengzhou Coal Mining is currently generating about 0.04 per unit of risk. If you would invest 3,601 in Anhui Jianghuai Automobile on November 9, 2024 and sell it today you would earn a total of 375.00 from holding Anhui Jianghuai Automobile or generate 10.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Anhui Jianghuai Automobile vs. Zhengzhou Coal Mining
Performance |
| Timeline |
| Anhui Jianghuai Auto |
Risk-Adjusted Performance
Very Weak
Weak | Strong |
| Zhengzhou Coal Mining |
Risk-Adjusted Performance
Very Weak
Weak | Strong |
Anhui Jianghuai and Zhengzhou Coal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Anhui Jianghuai and Zhengzhou Coal
The main advantage of trading using opposite Anhui Jianghuai and Zhengzhou Coal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Anhui Jianghuai position performs unexpectedly, Zhengzhou Coal 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 Zhengzhou Coal will offset losses from the drop in Zhengzhou Coal's long position.The idea behind Anhui Jianghuai Automobile and Zhengzhou Coal Mining pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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