Correlation Between Cultural Investment and Shenyang Chemical
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By analyzing existing cross correlation between Cultural Investment Holdings and Shenyang Chemical Industry, you can compare the effects of market volatilities on Cultural Investment and Shenyang Chemical 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 Cultural Investment with a short position of Shenyang Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cultural Investment and Shenyang Chemical.
Diversification Opportunities for Cultural Investment and Shenyang Chemical
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Cultural and Shenyang is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Cultural Investment Holdings and Shenyang Chemical Industry in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shenyang Chemical and Cultural Investment 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 Cultural Investment Holdings are associated (or correlated) with Shenyang Chemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shenyang Chemical has no effect on the direction of Cultural Investment i.e., Cultural Investment and Shenyang Chemical go up and down completely randomly.
Pair Corralation between Cultural Investment and Shenyang Chemical
Assuming the 90 days trading horizon Cultural Investment Holdings is expected to under-perform the Shenyang Chemical. But the stock apears to be less risky and, when comparing its historical volatility, Cultural Investment Holdings is 1.26 times less risky than Shenyang Chemical. The stock trades about -0.25 of its potential returns per unit of risk. The Shenyang Chemical Industry is currently generating about -0.1 of returns per unit of risk over similar time horizon. If you would invest 339.00 in Shenyang Chemical Industry on October 31, 2024 and sell it today you would lose (16.00) from holding Shenyang Chemical Industry or give up 4.72% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cultural Investment Holdings vs. Shenyang Chemical Industry
Performance |
| Timeline |
| Cultural Investment |
| Shenyang Chemical |
Cultural Investment and Shenyang Chemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cultural Investment and Shenyang Chemical
The main advantage of trading using opposite Cultural Investment and Shenyang Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cultural Investment position performs unexpectedly, Shenyang Chemical 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 Shenyang Chemical will offset losses from the drop in Shenyang Chemical's long position.The idea behind Cultural Investment Holdings and Shenyang Chemical Industry 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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