Correlation Between Shandong Gold and Liaoning Dingjide
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By analyzing existing cross correlation between Shandong Gold Mining and Liaoning Dingjide Petrochemical, you can compare the effects of market volatilities on Shandong Gold and Liaoning Dingjide 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 Liaoning Dingjide. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shandong Gold and Liaoning Dingjide.
Diversification Opportunities for Shandong Gold and Liaoning Dingjide
-0.38 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Shandong and Liaoning is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Shandong Gold Mining and Liaoning Dingjide Petrochemica in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Liaoning Dingjide 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 Liaoning Dingjide. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Liaoning Dingjide has no effect on the direction of Shandong Gold i.e., Shandong Gold and Liaoning Dingjide go up and down completely randomly.
Pair Corralation between Shandong Gold and Liaoning Dingjide
Assuming the 90 days trading horizon Shandong Gold Mining is expected to under-perform the Liaoning Dingjide. But the stock apears to be less risky and, when comparing its historical volatility, Shandong Gold Mining is 2.54 times less risky than Liaoning Dingjide. The stock trades about -0.38 of its potential returns per unit of risk. The Liaoning Dingjide Petrochemical is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 2,908 in Liaoning Dingjide Petrochemical on August 29, 2024 and sell it today you would earn a total of 131.00 from holding Liaoning Dingjide Petrochemical or generate 4.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Shandong Gold Mining vs. Liaoning Dingjide Petrochemica
Performance |
| Timeline |
| Shandong Gold Mining |
| Liaoning Dingjide |
Shandong Gold and Liaoning Dingjide Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shandong Gold and Liaoning Dingjide
The main advantage of trading using opposite Shandong Gold and Liaoning Dingjide positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shandong Gold position performs unexpectedly, Liaoning Dingjide 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 Liaoning Dingjide will offset losses from the drop in Liaoning Dingjide's long position.| Shandong Gold vs. Dongguan Aohai Technology | Shandong Gold vs. Jiujiang Shanshui Technology | Shandong Gold vs. Guangzhou KingTeller Technology | Shandong Gold vs. GigaDevice SemiconductorBeiji |
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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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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