Correlation Between China State and Shanghai Lingyun
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By analyzing existing cross correlation between China State Construction and Shanghai Lingyun Industries, you can compare the effects of market volatilities on China State and Shanghai Lingyun 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 China State with a short position of Shanghai Lingyun. Check out your portfolio center. Please also check ongoing floating volatility patterns of China State and Shanghai Lingyun.
Diversification Opportunities for China State and Shanghai Lingyun
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between China and Shanghai is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding China State Construction and Shanghai Lingyun Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shanghai Lingyun Ind and China State 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 China State Construction are associated (or correlated) with Shanghai Lingyun. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shanghai Lingyun Ind has no effect on the direction of China State i.e., China State and Shanghai Lingyun go up and down completely randomly.
Pair Corralation between China State and Shanghai Lingyun
Assuming the 90 days trading horizon China State Construction is expected to under-perform the Shanghai Lingyun. But the stock apears to be less risky and, when comparing its historical volatility, China State Construction is 1.56 times less risky than Shanghai Lingyun. The stock trades about -0.01 of its potential returns per unit of risk. The Shanghai Lingyun Industries is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 35.00 in Shanghai Lingyun Industries on August 30, 2024 and sell it today you would earn a total of 3.00 from holding Shanghai Lingyun Industries or generate 8.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
China State Construction vs. Shanghai Lingyun Industries
Performance |
| Timeline |
| China State Construction |
| Shanghai Lingyun Ind |
China State and Shanghai Lingyun Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China State and Shanghai Lingyun
The main advantage of trading using opposite China State and Shanghai Lingyun positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China State position performs unexpectedly, Shanghai Lingyun 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 Shanghai Lingyun will offset losses from the drop in Shanghai Lingyun's long position.| China State vs. Hangzhou Gaoxin Rubber | China State vs. Orinko Advanced Plastics | China State vs. De Rucci Healthy | China State vs. Everjoy Health Group |
| Shanghai Lingyun vs. Sinosteel Engineering and | Shanghai Lingyun vs. Jiangxi JDL Environmental | Shanghai Lingyun vs. Guangdong Liantai Environmental | Shanghai Lingyun vs. Tianjin Capital Environmental |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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