Correlation Between Longjian Road and Shandong Hongchuang
Specify exactly 2 symbols:
By analyzing existing cross correlation between Longjian Road Bridge and Shandong Hongchuang Aluminum, you can compare the effects of market volatilities on Longjian Road and Shandong Hongchuang 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 Longjian Road with a short position of Shandong Hongchuang. Check out your portfolio center. Please also check ongoing floating volatility patterns of Longjian Road and Shandong Hongchuang.
Diversification Opportunities for Longjian Road and Shandong Hongchuang
-0.39 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Longjian and Shandong is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Longjian Road Bridge and Shandong Hongchuang Aluminum in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shandong Hongchuang and Longjian Road 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 Longjian Road Bridge are associated (or correlated) with Shandong Hongchuang. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shandong Hongchuang has no effect on the direction of Longjian Road i.e., Longjian Road and Shandong Hongchuang go up and down completely randomly.
Pair Corralation between Longjian Road and Shandong Hongchuang
Assuming the 90 days trading horizon Longjian Road Bridge is expected to under-perform the Shandong Hongchuang. But the stock apears to be less risky and, when comparing its historical volatility, Longjian Road Bridge is 2.08 times less risky than Shandong Hongchuang. The stock trades about -0.03 of its potential returns per unit of risk. The Shandong Hongchuang Aluminum is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 987.00 in Shandong Hongchuang Aluminum on November 8, 2024 and sell it today you would earn a total of 46.00 from holding Shandong Hongchuang Aluminum or generate 4.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Longjian Road Bridge vs. Shandong Hongchuang Aluminum
Performance |
| Timeline |
| Longjian Road Bridge |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Shandong Hongchuang |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Good
Longjian Road and Shandong Hongchuang Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Longjian Road and Shandong Hongchuang
The main advantage of trading using opposite Longjian Road and Shandong Hongchuang positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Longjian Road position performs unexpectedly, Shandong Hongchuang 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 Shandong Hongchuang will offset losses from the drop in Shandong Hongchuang's long position.The idea behind Longjian Road Bridge and Shandong Hongchuang Aluminum 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.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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
Other Complementary Tools
| Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities | |
| Share Portfolio Track or share privately all of your investments from the convenience of any device | |
| Analyst Advice Analyst recommendations and target price estimates broken down by several categories | |
| Portfolio Anywhere Track or share privately all of your investments from the convenience of any device | |
| Top Crypto Exchanges Search and analyze digital assets across top global cryptocurrency exchanges |