Correlation Between Aurora Optoelectronics and Jiujiang Shanshui
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By analyzing existing cross correlation between Aurora Optoelectronics Co and Jiujiang Shanshui Technology, you can compare the effects of market volatilities on Aurora Optoelectronics and Jiujiang Shanshui 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 Aurora Optoelectronics with a short position of Jiujiang Shanshui. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aurora Optoelectronics and Jiujiang Shanshui.
Diversification Opportunities for Aurora Optoelectronics and Jiujiang Shanshui
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Aurora and Jiujiang is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Aurora Optoelectronics Co and Jiujiang Shanshui Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jiujiang Shanshui and Aurora Optoelectronics 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 Aurora Optoelectronics Co are associated (or correlated) with Jiujiang Shanshui. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jiujiang Shanshui has no effect on the direction of Aurora Optoelectronics i.e., Aurora Optoelectronics and Jiujiang Shanshui go up and down completely randomly.
Pair Corralation between Aurora Optoelectronics and Jiujiang Shanshui
Assuming the 90 days trading horizon Aurora Optoelectronics Co is expected to under-perform the Jiujiang Shanshui. In addition to that, Aurora Optoelectronics is 2.56 times more volatile than Jiujiang Shanshui Technology. It trades about -0.07 of its total potential returns per unit of risk. Jiujiang Shanshui Technology is currently generating about -0.08 per unit of volatility. If you would invest 1,630 in Jiujiang Shanshui Technology on October 30, 2024 and sell it today you would lose (90.00) from holding Jiujiang Shanshui Technology or give up 5.52% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Aurora Optoelectronics Co vs. Jiujiang Shanshui Technology
Performance |
| Timeline |
| Aurora Optoelectronics |
| Jiujiang Shanshui |
Aurora Optoelectronics and Jiujiang Shanshui Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aurora Optoelectronics and Jiujiang Shanshui
The main advantage of trading using opposite Aurora Optoelectronics and Jiujiang Shanshui positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aurora Optoelectronics position performs unexpectedly, Jiujiang Shanshui 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 Jiujiang Shanshui will offset losses from the drop in Jiujiang Shanshui's long position.The idea behind Aurora Optoelectronics Co and Jiujiang Shanshui Technology 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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