Correlation Between Shanghai Shibei and North Huajin
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By analyzing existing cross correlation between Shanghai Shibei Hi Tech and North Huajin Chemical, you can compare the effects of market volatilities on Shanghai Shibei and North Huajin 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 Shanghai Shibei with a short position of North Huajin. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shanghai Shibei and North Huajin.
Diversification Opportunities for Shanghai Shibei and North Huajin
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Shanghai and North is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Shanghai Shibei Hi Tech and North Huajin Chemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on North Huajin Chemical and Shanghai Shibei 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 Shanghai Shibei Hi Tech are associated (or correlated) with North Huajin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of North Huajin Chemical has no effect on the direction of Shanghai Shibei i.e., Shanghai Shibei and North Huajin go up and down completely randomly.
Pair Corralation between Shanghai Shibei and North Huajin
Assuming the 90 days trading horizon Shanghai Shibei Hi Tech is expected to under-perform the North Huajin. In addition to that, Shanghai Shibei is 1.27 times more volatile than North Huajin Chemical. It trades about -0.27 of its total potential returns per unit of risk. North Huajin Chemical is currently generating about -0.3 per unit of volatility. If you would invest 486.00 in North Huajin Chemical on October 24, 2024 and sell it today you would lose (50.00) from holding North Huajin Chemical or give up 10.29% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Shanghai Shibei Hi Tech vs. North Huajin Chemical
Performance |
| Timeline |
| Shanghai Shibei Hi |
| North Huajin Chemical |
Shanghai Shibei and North Huajin Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shanghai Shibei and North Huajin
The main advantage of trading using opposite Shanghai Shibei and North Huajin positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shanghai Shibei position performs unexpectedly, North Huajin 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 North Huajin will offset losses from the drop in North Huajin's long position.| Shanghai Shibei vs. Industrial and Commercial | Shanghai Shibei vs. Agricultural Bank of | Shanghai Shibei vs. China Construction Bank | Shanghai Shibei vs. Bank of China |
| North Huajin vs. Zijin Mining Group | North Huajin vs. Wanhua Chemical Group | North Huajin vs. Baoshan Iron Steel | North Huajin vs. Shandong Gold Mining |
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 Valuation module to check real value of public entities based on technical and fundamental data.
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