Correlation Between Beijing Sanyuan and Sany Heavy
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By analyzing existing cross correlation between Beijing Sanyuan Foods and Sany Heavy Industry, you can compare the effects of market volatilities on Beijing Sanyuan and Sany Heavy 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 Beijing Sanyuan with a short position of Sany Heavy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Beijing Sanyuan and Sany Heavy.
Diversification Opportunities for Beijing Sanyuan and Sany Heavy
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Beijing and Sany is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Beijing Sanyuan Foods and Sany Heavy Industry in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sany Heavy Industry and Beijing Sanyuan 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 Beijing Sanyuan Foods are associated (or correlated) with Sany Heavy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sany Heavy Industry has no effect on the direction of Beijing Sanyuan i.e., Beijing Sanyuan and Sany Heavy go up and down completely randomly.
Pair Corralation between Beijing Sanyuan and Sany Heavy
Assuming the 90 days trading horizon Beijing Sanyuan is expected to generate 1.56 times less return on investment than Sany Heavy. But when comparing it to its historical volatility, Beijing Sanyuan Foods is 1.11 times less risky than Sany Heavy. It trades about 0.01 of its potential returns per unit of risk. Sany Heavy Industry is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 1,604 in Sany Heavy Industry on September 14, 2024 and sell it today you would earn a total of 98.00 from holding Sany Heavy Industry or generate 6.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Beijing Sanyuan Foods vs. Sany Heavy Industry
Performance |
| Timeline |
| Beijing Sanyuan Foods |
| Sany Heavy Industry |
Beijing Sanyuan and Sany Heavy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Beijing Sanyuan and Sany Heavy
The main advantage of trading using opposite Beijing Sanyuan and Sany Heavy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Beijing Sanyuan position performs unexpectedly, Sany Heavy 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 Sany Heavy will offset losses from the drop in Sany Heavy's long position.The idea behind Beijing Sanyuan Foods and Sany Heavy Industry 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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