Correlation Between New China and Shandong Ruifeng
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By analyzing existing cross correlation between New China Life and Shandong Ruifeng Chemical, you can compare the effects of market volatilities on New China and Shandong Ruifeng 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 New China with a short position of Shandong Ruifeng. Check out your portfolio center. Please also check ongoing floating volatility patterns of New China and Shandong Ruifeng.
Diversification Opportunities for New China and Shandong Ruifeng
0.52 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between New and Shandong is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding New China Life and Shandong Ruifeng Chemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shandong Ruifeng Chemical and New China 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 New China Life are associated (or correlated) with Shandong Ruifeng. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shandong Ruifeng Chemical has no effect on the direction of New China i.e., New China and Shandong Ruifeng go up and down completely randomly.
Pair Corralation between New China and Shandong Ruifeng
Assuming the 90 days trading horizon New China Life is expected to generate 0.69 times more return on investment than Shandong Ruifeng. However, New China Life is 1.45 times less risky than Shandong Ruifeng. It trades about 0.05 of its potential returns per unit of risk. Shandong Ruifeng Chemical is currently generating about 0.02 per unit of risk. If you would invest 2,932 in New China Life on October 30, 2024 and sell it today you would earn a total of 1,831 from holding New China Life or generate 62.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
New China Life vs. Shandong Ruifeng Chemical
Performance |
| Timeline |
| New China Life |
| Shandong Ruifeng Chemical |
New China and Shandong Ruifeng Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with New China and Shandong Ruifeng
The main advantage of trading using opposite New China and Shandong Ruifeng positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if New China position performs unexpectedly, Shandong Ruifeng 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 Shandong Ruifeng will offset losses from the drop in Shandong Ruifeng's long position.| New China vs. Citic Offshore Helicopter | New China vs. Northern United Publishing | New China vs. Tibet Huayu Mining | New China vs. Xinjiang Baodi Mining |
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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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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