Correlation Between Shanghai Material and Long Yuan
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By analyzing existing cross correlation between Shanghai Material Trading and Long Yuan Construction, you can compare the effects of market volatilities on Shanghai Material and Long Yuan 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 Long Yuan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shanghai Material and Long Yuan.
Diversification Opportunities for Shanghai Material and Long Yuan
0.57 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Shanghai and Long is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Shanghai Material Trading and Long Yuan Construction in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Long Yuan Construction 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 Long Yuan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Long Yuan Construction has no effect on the direction of Shanghai Material i.e., Shanghai Material and Long Yuan go up and down completely randomly.
Pair Corralation between Shanghai Material and Long Yuan
Assuming the 90 days trading horizon Shanghai Material Trading is expected to under-perform the Long Yuan. But the stock apears to be less risky and, when comparing its historical volatility, Shanghai Material Trading is 1.27 times less risky than Long Yuan. The stock trades about -0.08 of its potential returns per unit of risk. The Long Yuan Construction is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest 340.00 in Long Yuan Construction on November 4, 2024 and sell it today you would earn a total of 26.00 from holding Long Yuan Construction or generate 7.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Shanghai Material Trading vs. Long Yuan Construction
Performance |
| Timeline |
| Shanghai Material Trading |
| Long Yuan Construction |
Shanghai Material and Long Yuan Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shanghai Material and Long Yuan
The main advantage of trading using opposite Shanghai Material and Long Yuan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shanghai Material position performs unexpectedly, Long Yuan 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 Long Yuan will offset losses from the drop in Long Yuan's long position.| Shanghai Material vs. Shengda Mining Co | Shanghai Material vs. Zhengzhou Coal Mining | Shanghai Material vs. Uroica Mining Safety | Shanghai Material vs. Guangdong Jingyi Metal |
| Long Yuan vs. Tongyu Communication | Long Yuan vs. HaiXin Foods Co | Long Yuan vs. V V Food | Long Yuan vs. Yan Tai Shuang |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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