Correlation Between Anhui Jianghuai and Shanghai OPM
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By analyzing existing cross correlation between Anhui Jianghuai Automobile and Shanghai OPM Biosciences, you can compare the effects of market volatilities on Anhui Jianghuai and Shanghai OPM 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 Shanghai OPM. Check out your portfolio center. Please also check ongoing floating volatility patterns of Anhui Jianghuai and Shanghai OPM.
Diversification Opportunities for Anhui Jianghuai and Shanghai OPM
-0.07 | Correlation Coefficient |
Good diversification
The 3 months correlation between Anhui and Shanghai is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Anhui Jianghuai Automobile and Shanghai OPM Biosciences in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shanghai OPM Biosciences 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 Shanghai OPM. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shanghai OPM Biosciences has no effect on the direction of Anhui Jianghuai i.e., Anhui Jianghuai and Shanghai OPM go up and down completely randomly.
Pair Corralation between Anhui Jianghuai and Shanghai OPM
Assuming the 90 days trading horizon Anhui Jianghuai Automobile is expected to generate 1.04 times more return on investment than Shanghai OPM. However, Anhui Jianghuai is 1.04 times more volatile than Shanghai OPM Biosciences. It trades about 0.08 of its potential returns per unit of risk. Shanghai OPM Biosciences is currently generating about -0.02 per unit of risk. If you would invest 1,263 in Anhui Jianghuai Automobile on November 28, 2024 and sell it today you would earn a total of 2,315 from holding Anhui Jianghuai Automobile or generate 183.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Anhui Jianghuai Automobile vs. Shanghai OPM Biosciences
Performance |
| Timeline |
| Anhui Jianghuai Auto |
| Shanghai OPM Biosciences |
Anhui Jianghuai and Shanghai OPM Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Anhui Jianghuai and Shanghai OPM
The main advantage of trading using opposite Anhui Jianghuai and Shanghai OPM positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Anhui Jianghuai position performs unexpectedly, Shanghai OPM 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 Shanghai OPM will offset losses from the drop in Shanghai OPM's long position.The idea behind Anhui Jianghuai Automobile and Shanghai OPM Biosciences 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.
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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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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