Correlation Between Shaanxi Construction and Gifore Agricultural
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By analyzing existing cross correlation between Shaanxi Construction Machinery and Gifore Agricultural Machinery, you can compare the effects of market volatilities on Shaanxi Construction and Gifore Agricultural 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 Shaanxi Construction with a short position of Gifore Agricultural. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shaanxi Construction and Gifore Agricultural.
Diversification Opportunities for Shaanxi Construction and Gifore Agricultural
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Shaanxi and Gifore is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Shaanxi Construction Machinery and Gifore Agricultural Machinery in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gifore Agricultural and Shaanxi Construction 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 Shaanxi Construction Machinery are associated (or correlated) with Gifore Agricultural. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gifore Agricultural has no effect on the direction of Shaanxi Construction i.e., Shaanxi Construction and Gifore Agricultural go up and down completely randomly.
Pair Corralation between Shaanxi Construction and Gifore Agricultural
Assuming the 90 days trading horizon Shaanxi Construction Machinery is expected to under-perform the Gifore Agricultural. In addition to that, Shaanxi Construction is 1.05 times more volatile than Gifore Agricultural Machinery. It trades about -0.18 of its total potential returns per unit of risk. Gifore Agricultural Machinery is currently generating about 0.09 per unit of volatility. If you would invest 495.00 in Gifore Agricultural Machinery on September 12, 2024 and sell it today you would earn a total of 23.00 from holding Gifore Agricultural Machinery or generate 4.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Shaanxi Construction Machinery vs. Gifore Agricultural Machinery
Performance |
| Timeline |
| Shaanxi Construction |
| Gifore Agricultural |
Shaanxi Construction and Gifore Agricultural Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shaanxi Construction and Gifore Agricultural
The main advantage of trading using opposite Shaanxi Construction and Gifore Agricultural positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shaanxi Construction position performs unexpectedly, Gifore Agricultural 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 Gifore Agricultural will offset losses from the drop in Gifore Agricultural's long position.The idea behind Shaanxi Construction Machinery and Gifore Agricultural Machinery 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.
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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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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