Correlation Between Huaibei Mining and Beijing Ultrapower
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By analyzing existing cross correlation between Huaibei Mining Holdings and Beijing Ultrapower Software, you can compare the effects of market volatilities on Huaibei Mining and Beijing Ultrapower 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 Huaibei Mining with a short position of Beijing Ultrapower. Check out your portfolio center. Please also check ongoing floating volatility patterns of Huaibei Mining and Beijing Ultrapower.
Diversification Opportunities for Huaibei Mining and Beijing Ultrapower
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Huaibei and Beijing is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Huaibei Mining Holdings and Beijing Ultrapower Software in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Beijing Ultrapower and Huaibei Mining 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 Huaibei Mining Holdings are associated (or correlated) with Beijing Ultrapower. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Beijing Ultrapower has no effect on the direction of Huaibei Mining i.e., Huaibei Mining and Beijing Ultrapower go up and down completely randomly.
Pair Corralation between Huaibei Mining and Beijing Ultrapower
Assuming the 90 days trading horizon Huaibei Mining is expected to generate 3.14 times less return on investment than Beijing Ultrapower. But when comparing it to its historical volatility, Huaibei Mining Holdings is 1.26 times less risky than Beijing Ultrapower. It trades about 0.19 of its potential returns per unit of risk. Beijing Ultrapower Software is currently generating about 0.48 of returns per unit of risk over similar time horizon. If you would invest 1,088 in Beijing Ultrapower Software on November 7, 2024 and sell it today you would earn a total of 158.00 from holding Beijing Ultrapower Software or generate 14.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Huaibei Mining Holdings vs. Beijing Ultrapower Software
Performance |
| Timeline |
| Huaibei Mining Holdings |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Beijing Ultrapower |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Huaibei Mining and Beijing Ultrapower Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Huaibei Mining and Beijing Ultrapower
The main advantage of trading using opposite Huaibei Mining and Beijing Ultrapower positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Huaibei Mining position performs unexpectedly, Beijing Ultrapower 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 Beijing Ultrapower will offset losses from the drop in Beijing Ultrapower's long position.The idea behind Huaibei Mining Holdings and Beijing Ultrapower Software 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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