Correlation Between Heilongjiang Transport and Zoy Home
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By analyzing existing cross correlation between Heilongjiang Transport Development and Zoy Home Furnishing, you can compare the effects of market volatilities on Heilongjiang Transport and Zoy Home 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 Zoy Home. Check out your portfolio center. Please also check ongoing floating volatility patterns of Heilongjiang Transport and Zoy Home.
Diversification Opportunities for Heilongjiang Transport and Zoy Home
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Heilongjiang and Zoy is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Heilongjiang Transport Develop and Zoy Home Furnishing in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zoy Home Furnishing 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 Zoy Home. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zoy Home Furnishing has no effect on the direction of Heilongjiang Transport i.e., Heilongjiang Transport and Zoy Home go up and down completely randomly.
Pair Corralation between Heilongjiang Transport and Zoy Home
Assuming the 90 days trading horizon Heilongjiang Transport Development is expected to under-perform the Zoy Home. But the stock apears to be less risky and, when comparing its historical volatility, Heilongjiang Transport Development is 1.89 times less risky than Zoy Home. The stock trades about -0.16 of its potential returns per unit of risk. The Zoy Home Furnishing is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 1,087 in Zoy Home Furnishing on November 1, 2024 and sell it today you would earn a total of 47.00 from holding Zoy Home Furnishing or generate 4.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Heilongjiang Transport Develop vs. Zoy Home Furnishing
Performance |
| Timeline |
| Heilongjiang Transport |
| Zoy Home Furnishing |
Heilongjiang Transport and Zoy Home Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Heilongjiang Transport and Zoy Home
The main advantage of trading using opposite Heilongjiang Transport and Zoy Home positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Heilongjiang Transport position performs unexpectedly, Zoy Home 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 Zoy Home will offset losses from the drop in Zoy Home's long position.The idea behind Heilongjiang Transport Development and Zoy Home Furnishing 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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