Correlation Between Beijing Sanyuan and Shandong Huifa
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By analyzing existing cross correlation between Beijing Sanyuan Foods and Shandong Huifa Foodstuff, you can compare the effects of market volatilities on Beijing Sanyuan 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 Beijing Sanyuan with a short position of Shandong Huifa. Check out your portfolio center. Please also check ongoing floating volatility patterns of Beijing Sanyuan and Shandong Huifa.
Diversification Opportunities for Beijing Sanyuan and Shandong Huifa
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Beijing and Shandong is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Beijing Sanyuan Foods 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 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 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 Beijing Sanyuan i.e., Beijing Sanyuan and Shandong Huifa go up and down completely randomly.
Pair Corralation between Beijing Sanyuan and Shandong Huifa
Assuming the 90 days trading horizon Beijing Sanyuan is expected to generate 2.66 times less return on investment than Shandong Huifa. But when comparing it to its historical volatility, Beijing Sanyuan Foods is 2.67 times less risky than Shandong Huifa. It trades about 0.12 of its potential returns per unit of risk. Shandong Huifa Foodstuff is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 1,002 in Shandong Huifa Foodstuff on September 5, 2024 and sell it today you would earn a total of 106.00 from holding Shandong Huifa Foodstuff or generate 10.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Beijing Sanyuan Foods vs. Shandong Huifa Foodstuff
Performance |
| Timeline |
| Beijing Sanyuan Foods |
| Shandong Huifa Foodstuff |
Beijing Sanyuan and Shandong Huifa Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Beijing Sanyuan and Shandong Huifa
The main advantage of trading using opposite Beijing Sanyuan and Shandong Huifa positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Beijing Sanyuan 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.| Beijing Sanyuan vs. Xian International Medical | Beijing Sanyuan vs. Xinjiang Zhongtai Chemical | Beijing Sanyuan vs. Xilong Chemical Co | Beijing Sanyuan vs. North Huajin Chemical |
| 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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