Correlation Between Shandong Gold and Jiangxi Hengda
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By analyzing existing cross correlation between Shandong Gold Mining and Jiangxi Hengda Hi Tech, you can compare the effects of market volatilities on Shandong Gold and Jiangxi Hengda 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 Shandong Gold with a short position of Jiangxi Hengda. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shandong Gold and Jiangxi Hengda.
Diversification Opportunities for Shandong Gold and Jiangxi Hengda
0.01 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Shandong and Jiangxi is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Shandong Gold Mining and Jiangxi Hengda Hi Tech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jiangxi Hengda Hi and Shandong Gold 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 Shandong Gold Mining are associated (or correlated) with Jiangxi Hengda. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jiangxi Hengda Hi has no effect on the direction of Shandong Gold i.e., Shandong Gold and Jiangxi Hengda go up and down completely randomly.
Pair Corralation between Shandong Gold and Jiangxi Hengda
Assuming the 90 days trading horizon Shandong Gold is expected to generate 7.32 times less return on investment than Jiangxi Hengda. But when comparing it to its historical volatility, Shandong Gold Mining is 2.26 times less risky than Jiangxi Hengda. It trades about 0.05 of its potential returns per unit of risk. Jiangxi Hengda Hi Tech is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest 448.00 in Jiangxi Hengda Hi Tech on November 7, 2024 and sell it today you would earn a total of 43.00 from holding Jiangxi Hengda Hi Tech or generate 9.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Shandong Gold Mining vs. Jiangxi Hengda Hi Tech
Performance |
| Timeline |
| Shandong Gold Mining |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Jiangxi Hengda Hi |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Shandong Gold and Jiangxi Hengda Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shandong Gold and Jiangxi Hengda
The main advantage of trading using opposite Shandong Gold and Jiangxi Hengda positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shandong Gold position performs unexpectedly, Jiangxi Hengda 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 Jiangxi Hengda will offset losses from the drop in Jiangxi Hengda's long position.The idea behind Shandong Gold Mining and Jiangxi Hengda Hi Tech 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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