Correlation Between Longjian Road and Chengdu Xinzhu
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By analyzing existing cross correlation between Longjian Road Bridge and Chengdu Xinzhu RoadBridge, you can compare the effects of market volatilities on Longjian Road and Chengdu Xinzhu 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 Chengdu Xinzhu. Check out your portfolio center. Please also check ongoing floating volatility patterns of Longjian Road and Chengdu Xinzhu.
Diversification Opportunities for Longjian Road and Chengdu Xinzhu
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Longjian and Chengdu is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Longjian Road Bridge and Chengdu Xinzhu RoadBridge in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chengdu Xinzhu RoadBridge 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 Chengdu Xinzhu. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chengdu Xinzhu RoadBridge has no effect on the direction of Longjian Road i.e., Longjian Road and Chengdu Xinzhu go up and down completely randomly.
Pair Corralation between Longjian Road and Chengdu Xinzhu
Assuming the 90 days trading horizon Longjian Road Bridge is expected to generate 1.18 times more return on investment than Chengdu Xinzhu. However, Longjian Road is 1.18 times more volatile than Chengdu Xinzhu RoadBridge. It trades about 0.02 of its potential returns per unit of risk. Chengdu Xinzhu RoadBridge is currently generating about -0.01 per unit of risk. If you would invest 329.00 in Longjian Road Bridge on August 24, 2024 and sell it today you would earn a total of 43.00 from holding Longjian Road Bridge or generate 13.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Longjian Road Bridge vs. Chengdu Xinzhu RoadBridge
Performance |
| Timeline |
| Longjian Road Bridge |
| Chengdu Xinzhu RoadBridge |
Longjian Road and Chengdu Xinzhu Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Longjian Road and Chengdu Xinzhu
The main advantage of trading using opposite Longjian Road and Chengdu Xinzhu positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Longjian Road position performs unexpectedly, Chengdu Xinzhu 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 Chengdu Xinzhu will offset losses from the drop in Chengdu Xinzhu's long position.| Longjian Road vs. Chengdu Kanghua Biological | Longjian Road vs. Beijing Wantai Biological | Longjian Road vs. Suzhou Novoprotein Scientific | Longjian Road vs. Aluminum Corp of |
| Chengdu Xinzhu vs. Chengdu Kanghua Biological | Chengdu Xinzhu vs. Beijing Wantai Biological | Chengdu Xinzhu vs. Suzhou Novoprotein Scientific | Chengdu Xinzhu vs. Aluminum Corp of |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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