Correlation Between Shanghai Pharmaceuticals and Xinhua Winshare
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By analyzing existing cross correlation between Shanghai Pharmaceuticals Holding and Xinhua Winshare Publishing, you can compare the effects of market volatilities on Shanghai Pharmaceuticals and Xinhua Winshare 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 Shanghai Pharmaceuticals with a short position of Xinhua Winshare. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shanghai Pharmaceuticals and Xinhua Winshare.
Diversification Opportunities for Shanghai Pharmaceuticals and Xinhua Winshare
0.32 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Shanghai and Xinhua is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Shanghai Pharmaceuticals Holdi and Xinhua Winshare Publishing in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xinhua Winshare Publ and Shanghai Pharmaceuticals 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 Shanghai Pharmaceuticals Holding are associated (or correlated) with Xinhua Winshare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xinhua Winshare Publ has no effect on the direction of Shanghai Pharmaceuticals i.e., Shanghai Pharmaceuticals and Xinhua Winshare go up and down completely randomly.
Pair Corralation between Shanghai Pharmaceuticals and Xinhua Winshare
Assuming the 90 days trading horizon Shanghai Pharmaceuticals Holding is expected to generate 0.8 times more return on investment than Xinhua Winshare. However, Shanghai Pharmaceuticals Holding is 1.25 times less risky than Xinhua Winshare. It trades about 0.08 of its potential returns per unit of risk. Xinhua Winshare Publishing is currently generating about 0.01 per unit of risk. If you would invest 1,867 in Shanghai Pharmaceuticals Holding on September 14, 2024 and sell it today you would earn a total of 307.00 from holding Shanghai Pharmaceuticals Holding or generate 16.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Shanghai Pharmaceuticals Holdi vs. Xinhua Winshare Publishing
Performance |
| Timeline |
| Shanghai Pharmaceuticals |
| Xinhua Winshare Publ |
Shanghai Pharmaceuticals and Xinhua Winshare Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shanghai Pharmaceuticals and Xinhua Winshare
The main advantage of trading using opposite Shanghai Pharmaceuticals and Xinhua Winshare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shanghai Pharmaceuticals position performs unexpectedly, Xinhua Winshare 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 Xinhua Winshare will offset losses from the drop in Xinhua Winshare's long position.The idea behind Shanghai Pharmaceuticals Holding and Xinhua Winshare Publishing 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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