Correlation Between Yangmei Chemical and Zhongyin Babi
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By analyzing existing cross correlation between Yangmei Chemical Co and Zhongyin Babi Food, you can compare the effects of market volatilities on Yangmei Chemical and Zhongyin Babi 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 Yangmei Chemical with a short position of Zhongyin Babi. Check out your portfolio center. Please also check ongoing floating volatility patterns of Yangmei Chemical and Zhongyin Babi.
Diversification Opportunities for Yangmei Chemical and Zhongyin Babi
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Yangmei and Zhongyin is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Yangmei Chemical Co and Zhongyin Babi Food in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zhongyin Babi Food and Yangmei Chemical 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 Yangmei Chemical Co are associated (or correlated) with Zhongyin Babi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zhongyin Babi Food has no effect on the direction of Yangmei Chemical i.e., Yangmei Chemical and Zhongyin Babi go up and down completely randomly.
Pair Corralation between Yangmei Chemical and Zhongyin Babi
Assuming the 90 days trading horizon Yangmei Chemical Co is expected to under-perform the Zhongyin Babi. But the stock apears to be less risky and, when comparing its historical volatility, Yangmei Chemical Co is 1.51 times less risky than Zhongyin Babi. The stock trades about -0.5 of its potential returns per unit of risk. The Zhongyin Babi Food is currently generating about -0.07 of returns per unit of risk over similar time horizon. If you would invest 1,770 in Zhongyin Babi Food on October 7, 2024 and sell it today you would lose (120.00) from holding Zhongyin Babi Food or give up 6.78% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Yangmei Chemical Co vs. Zhongyin Babi Food
Performance |
| Timeline |
| Yangmei Chemical |
| Zhongyin Babi Food |
Yangmei Chemical and Zhongyin Babi Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Yangmei Chemical and Zhongyin Babi
The main advantage of trading using opposite Yangmei Chemical and Zhongyin Babi positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Yangmei Chemical position performs unexpectedly, Zhongyin Babi 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 Zhongyin Babi will offset losses from the drop in Zhongyin Babi's long position.| Yangmei Chemical vs. Zijin Mining Group | Yangmei Chemical vs. Wanhua Chemical Group | Yangmei Chemical vs. Baoshan Iron Steel | Yangmei Chemical vs. Hoshine Silicon Ind |
| Zhongyin Babi vs. Dr Peng Telecom | Zhongyin Babi vs. Tongyu Communication | Zhongyin Babi vs. SUNSEA Telecommunications Co | Zhongyin Babi vs. Guangdong Shenglu Telecommunication |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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