Correlation Between Gome Telecom and Shantui Construction
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By analyzing existing cross correlation between Gome Telecom Equipment and Shantui Construction Machinery, you can compare the effects of market volatilities on Gome Telecom and Shantui Construction 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 Gome Telecom with a short position of Shantui Construction. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gome Telecom and Shantui Construction.
Diversification Opportunities for Gome Telecom and Shantui Construction
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Gome and Shantui is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Gome Telecom Equipment and Shantui Construction Machinery in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shantui Construction and Gome Telecom 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 Gome Telecom Equipment are associated (or correlated) with Shantui Construction. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shantui Construction has no effect on the direction of Gome Telecom i.e., Gome Telecom and Shantui Construction go up and down completely randomly.
Pair Corralation between Gome Telecom and Shantui Construction
Assuming the 90 days trading horizon Gome Telecom Equipment is expected to generate 1.12 times more return on investment than Shantui Construction. However, Gome Telecom is 1.12 times more volatile than Shantui Construction Machinery. It trades about 0.16 of its potential returns per unit of risk. Shantui Construction Machinery is currently generating about 0.08 per unit of risk. If you would invest 102.00 in Gome Telecom Equipment on September 3, 2024 and sell it today you would earn a total of 88.00 from holding Gome Telecom Equipment or generate 86.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Gome Telecom Equipment vs. Shantui Construction Machinery
Performance |
| Timeline |
| Gome Telecom Equipment |
| Shantui Construction |
Gome Telecom and Shantui Construction Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gome Telecom and Shantui Construction
The main advantage of trading using opposite Gome Telecom and Shantui Construction positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gome Telecom position performs unexpectedly, Shantui Construction 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 Shantui Construction will offset losses from the drop in Shantui Construction's long position.| Gome Telecom vs. PetroChina Co Ltd | Gome Telecom vs. China Mobile Limited | Gome Telecom vs. Industrial and Commercial | Gome Telecom vs. China Life Insurance |
| Shantui Construction vs. Cultural Investment Holdings | Shantui Construction vs. Gome Telecom Equipment | Shantui Construction vs. Bus Online Co | Shantui Construction vs. Holitech Technology Co |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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