Correlation Between Shanghai Broadband and Dymatic Chemicals
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By analyzing existing cross correlation between Shanghai Broadband Technology and Dymatic Chemicals, you can compare the effects of market volatilities on Shanghai Broadband and Dymatic Chemicals 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 Broadband with a short position of Dymatic Chemicals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shanghai Broadband and Dymatic Chemicals.
Diversification Opportunities for Shanghai Broadband and Dymatic Chemicals
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Shanghai and Dymatic is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Shanghai Broadband Technology and Dymatic Chemicals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dymatic Chemicals and Shanghai Broadband 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 Broadband Technology are associated (or correlated) with Dymatic Chemicals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dymatic Chemicals has no effect on the direction of Shanghai Broadband i.e., Shanghai Broadband and Dymatic Chemicals go up and down completely randomly.
Pair Corralation between Shanghai Broadband and Dymatic Chemicals
Assuming the 90 days trading horizon Shanghai Broadband Technology is expected to under-perform the Dymatic Chemicals. In addition to that, Shanghai Broadband is 1.09 times more volatile than Dymatic Chemicals. It trades about -0.02 of its total potential returns per unit of risk. Dymatic Chemicals is currently generating about -0.01 per unit of volatility. If you would invest 735.00 in Dymatic Chemicals on October 11, 2024 and sell it today you would lose (168.00) from holding Dymatic Chemicals or give up 22.86% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Shanghai Broadband Technology vs. Dymatic Chemicals
Performance |
| Timeline |
| Shanghai Broadband |
| Dymatic Chemicals |
Shanghai Broadband and Dymatic Chemicals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shanghai Broadband and Dymatic Chemicals
The main advantage of trading using opposite Shanghai Broadband and Dymatic Chemicals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shanghai Broadband position performs unexpectedly, Dymatic Chemicals 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 Dymatic Chemicals will offset losses from the drop in Dymatic Chemicals' long position.The idea behind Shanghai Broadband Technology and Dymatic Chemicals 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 Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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