Correlation Between Heilongjiang Transport and Shengda Mining
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By analyzing existing cross correlation between Heilongjiang Transport Development and Shengda Mining Co, you can compare the effects of market volatilities on Heilongjiang Transport and Shengda Mining 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 Heilongjiang Transport with a short position of Shengda Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of Heilongjiang Transport and Shengda Mining.
Diversification Opportunities for Heilongjiang Transport and Shengda Mining
0.07 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Heilongjiang and Shengda is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Heilongjiang Transport Develop and Shengda Mining Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shengda Mining and Heilongjiang Transport 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 Heilongjiang Transport Development are associated (or correlated) with Shengda Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shengda Mining has no effect on the direction of Heilongjiang Transport i.e., Heilongjiang Transport and Shengda Mining go up and down completely randomly.
Pair Corralation between Heilongjiang Transport and Shengda Mining
Assuming the 90 days trading horizon Heilongjiang Transport is expected to generate 13.6 times less return on investment than Shengda Mining. But when comparing it to its historical volatility, Heilongjiang Transport Development is 1.46 times less risky than Shengda Mining. It trades about 0.05 of its potential returns per unit of risk. Shengda Mining Co is currently generating about 0.42 of returns per unit of risk over similar time horizon. If you would invest 1,207 in Shengda Mining Co on November 5, 2024 and sell it today you would earn a total of 177.00 from holding Shengda Mining Co or generate 14.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Heilongjiang Transport Develop vs. Shengda Mining Co
Performance |
| Timeline |
| Heilongjiang Transport |
| Shengda Mining |
Heilongjiang Transport and Shengda Mining Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Heilongjiang Transport and Shengda Mining
The main advantage of trading using opposite Heilongjiang Transport and Shengda Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Heilongjiang Transport position performs unexpectedly, Shengda Mining 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 Shengda Mining will offset losses from the drop in Shengda Mining's long position.The idea behind Heilongjiang Transport Development and Shengda Mining Co 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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