Correlation Between Shanghai Broadband and Tianjin Realty
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By analyzing existing cross correlation between Shanghai Broadband Technology and Tianjin Realty Development, you can compare the effects of market volatilities on Shanghai Broadband and Tianjin Realty 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 Tianjin Realty. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shanghai Broadband and Tianjin Realty.
Diversification Opportunities for Shanghai Broadband and Tianjin Realty
0.38 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Shanghai and Tianjin is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Shanghai Broadband Technology and Tianjin Realty Development in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tianjin Realty Devel 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 Tianjin Realty. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tianjin Realty Devel has no effect on the direction of Shanghai Broadband i.e., Shanghai Broadband and Tianjin Realty go up and down completely randomly.
Pair Corralation between Shanghai Broadband and Tianjin Realty
Assuming the 90 days trading horizon Shanghai Broadband Technology is expected to generate 0.75 times more return on investment than Tianjin Realty. However, Shanghai Broadband Technology is 1.33 times less risky than Tianjin Realty. It trades about -0.26 of its potential returns per unit of risk. Tianjin Realty Development is currently generating about -0.32 per unit of risk. If you would invest 380.00 in Shanghai Broadband Technology on October 14, 2024 and sell it today you would lose (66.00) from holding Shanghai Broadband Technology or give up 17.37% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Shanghai Broadband Technology vs. Tianjin Realty Development
Performance |
Timeline |
Shanghai Broadband |
Tianjin Realty Devel |
Shanghai Broadband and Tianjin Realty Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Shanghai Broadband and Tianjin Realty
The main advantage of trading using opposite Shanghai Broadband and Tianjin Realty positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shanghai Broadband position performs unexpectedly, Tianjin Realty 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 Tianjin Realty will offset losses from the drop in Tianjin Realty's long position.The idea behind Shanghai Broadband Technology and Tianjin Realty Development 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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