Correlation Between Pengxin International and First Capital
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By analyzing existing cross correlation between Pengxin International Mining and First Capital Securities, you can compare the effects of market volatilities on Pengxin International and First Capital 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 Pengxin International with a short position of First Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pengxin International and First Capital.
Diversification Opportunities for Pengxin International and First Capital
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Pengxin and First is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Pengxin International Mining and First Capital Securities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Capital Securities and Pengxin International 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 Pengxin International Mining are associated (or correlated) with First Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Capital Securities has no effect on the direction of Pengxin International i.e., Pengxin International and First Capital go up and down completely randomly.
Pair Corralation between Pengxin International and First Capital
Assuming the 90 days trading horizon Pengxin International Mining is expected to generate 2.03 times more return on investment than First Capital. However, Pengxin International is 2.03 times more volatile than First Capital Securities. It trades about -0.08 of its potential returns per unit of risk. First Capital Securities is currently generating about -0.44 per unit of risk. If you would invest 330.00 in Pengxin International Mining on October 15, 2024 and sell it today you would lose (35.00) from holding Pengxin International Mining or give up 10.61% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pengxin International Mining vs. First Capital Securities
Performance |
| Timeline |
| Pengxin International |
| First Capital Securities |
Pengxin International and First Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pengxin International and First Capital
The main advantage of trading using opposite Pengxin International and First Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pengxin International position performs unexpectedly, First Capital 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 First Capital will offset losses from the drop in First Capital's long position.The idea behind Pengxin International Mining and First Capital Securities 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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