Correlation Between Shaanxi Construction and Shanghai Xinhua
Specify exactly 2 symbols:
By analyzing existing cross correlation between Shaanxi Construction Machinery and Shanghai Xinhua Media, you can compare the effects of market volatilities on Shaanxi Construction and Shanghai Xinhua 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 Shanghai Xinhua. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shaanxi Construction and Shanghai Xinhua.
Diversification Opportunities for Shaanxi Construction and Shanghai Xinhua
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Shaanxi and Shanghai is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Shaanxi Construction Machinery and Shanghai Xinhua Media in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shanghai Xinhua Media 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 Shanghai Xinhua. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shanghai Xinhua Media has no effect on the direction of Shaanxi Construction i.e., Shaanxi Construction and Shanghai Xinhua go up and down completely randomly.
Pair Corralation between Shaanxi Construction and Shanghai Xinhua
Assuming the 90 days trading horizon Shaanxi Construction Machinery is expected to under-perform the Shanghai Xinhua. But the stock apears to be less risky and, when comparing its historical volatility, Shaanxi Construction Machinery is 1.13 times less risky than Shanghai Xinhua. The stock trades about -0.1 of its potential returns per unit of risk. The Shanghai Xinhua Media is currently generating about -0.06 of returns per unit of risk over similar time horizon. If you would invest 704.00 in Shanghai Xinhua Media on November 7, 2024 and sell it today you would lose (113.00) from holding Shanghai Xinhua Media or give up 16.05% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Shaanxi Construction Machinery vs. Shanghai Xinhua Media
Performance |
| Timeline |
| Shaanxi Construction |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Shanghai Xinhua Media |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Shaanxi Construction and Shanghai Xinhua Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shaanxi Construction and Shanghai Xinhua
The main advantage of trading using opposite Shaanxi Construction and Shanghai Xinhua positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shaanxi Construction position performs unexpectedly, Shanghai Xinhua 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 Shanghai Xinhua will offset losses from the drop in Shanghai Xinhua's long position.The idea behind Shaanxi Construction Machinery and Shanghai Xinhua Media 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
Other Complementary Tools
| Transaction History View history of all your transactions and understand their impact on performance | |
| Portfolio Center All portfolio management and optimization tools to improve performance of your portfolios | |
| Portfolio Dashboard Portfolio dashboard that provides centralized access to all your investments | |
| Money Flow Index Determine momentum by analyzing Money Flow Index and other technical indicators | |
| Aroon Oscillator Analyze current equity momentum using Aroon Oscillator and other momentum ratios |