Correlation Between Shaanxi Beiyuan and Anhui Jianghuai
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By analyzing existing cross correlation between Shaanxi Beiyuan Chemical and Anhui Jianghuai Automobile, you can compare the effects of market volatilities on Shaanxi Beiyuan and Anhui Jianghuai 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 Beiyuan with a short position of Anhui Jianghuai. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shaanxi Beiyuan and Anhui Jianghuai.
Diversification Opportunities for Shaanxi Beiyuan and Anhui Jianghuai
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Shaanxi and Anhui is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Shaanxi Beiyuan Chemical and Anhui Jianghuai Automobile in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Anhui Jianghuai Auto and Shaanxi Beiyuan 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 Beiyuan Chemical are associated (or correlated) with Anhui Jianghuai. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Anhui Jianghuai Auto has no effect on the direction of Shaanxi Beiyuan i.e., Shaanxi Beiyuan and Anhui Jianghuai go up and down completely randomly.
Pair Corralation between Shaanxi Beiyuan and Anhui Jianghuai
Assuming the 90 days trading horizon Shaanxi Beiyuan Chemical is expected to generate 0.3 times more return on investment than Anhui Jianghuai. However, Shaanxi Beiyuan Chemical is 3.31 times less risky than Anhui Jianghuai. It trades about 0.21 of its potential returns per unit of risk. Anhui Jianghuai Automobile is currently generating about -0.1 per unit of risk. If you would invest 426.00 in Shaanxi Beiyuan Chemical on September 5, 2024 and sell it today you would earn a total of 26.00 from holding Shaanxi Beiyuan Chemical or generate 6.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.65% |
| Values | Daily Returns |
Shaanxi Beiyuan Chemical vs. Anhui Jianghuai Automobile
Performance |
| Timeline |
| Shaanxi Beiyuan Chemical |
| Anhui Jianghuai Auto |
Shaanxi Beiyuan and Anhui Jianghuai Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shaanxi Beiyuan and Anhui Jianghuai
The main advantage of trading using opposite Shaanxi Beiyuan and Anhui Jianghuai positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shaanxi Beiyuan position performs unexpectedly, Anhui Jianghuai 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 Anhui Jianghuai will offset losses from the drop in Anhui Jianghuai's long position.The idea behind Shaanxi Beiyuan Chemical and Anhui Jianghuai Automobile 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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