Correlation Between Shanghai Material and Huatian Hotel
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By analyzing existing cross correlation between Shanghai Material Trading and Huatian Hotel Group, you can compare the effects of market volatilities on Shanghai Material and Huatian Hotel 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 Material with a short position of Huatian Hotel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shanghai Material and Huatian Hotel.
Diversification Opportunities for Shanghai Material and Huatian Hotel
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Shanghai and Huatian is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Shanghai Material Trading and Huatian Hotel Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Huatian Hotel Group and Shanghai Material 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 Material Trading are associated (or correlated) with Huatian Hotel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Huatian Hotel Group has no effect on the direction of Shanghai Material i.e., Shanghai Material and Huatian Hotel go up and down completely randomly.
Pair Corralation between Shanghai Material and Huatian Hotel
Assuming the 90 days trading horizon Shanghai Material Trading is expected to generate 1.55 times more return on investment than Huatian Hotel. However, Shanghai Material is 1.55 times more volatile than Huatian Hotel Group. It trades about 0.27 of its potential returns per unit of risk. Huatian Hotel Group is currently generating about 0.02 per unit of risk. If you would invest 954.00 in Shanghai Material Trading on September 3, 2024 and sell it today you would earn a total of 279.00 from holding Shanghai Material Trading or generate 29.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Shanghai Material Trading vs. Huatian Hotel Group
Performance |
| Timeline |
| Shanghai Material Trading |
| Huatian Hotel Group |
Shanghai Material and Huatian Hotel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shanghai Material and Huatian Hotel
The main advantage of trading using opposite Shanghai Material and Huatian Hotel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shanghai Material position performs unexpectedly, Huatian Hotel 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 Huatian Hotel will offset losses from the drop in Huatian Hotel's long position.| Shanghai Material vs. Ye Chiu Metal | Shanghai Material vs. Jiangsu Jinling Sports | Shanghai Material vs. Xinjiang Baodi Mining | Shanghai Material vs. Hengli Industrial Development |
| Huatian Hotel vs. PetroChina Co Ltd | Huatian Hotel vs. China Mobile Limited | Huatian Hotel vs. Industrial and Commercial | Huatian Hotel vs. China Life Insurance |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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