Correlation Between Shanghai Electric and Chengdu Kanghua
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By analyzing existing cross correlation between Shanghai Electric Group and Chengdu Kanghua Biological, you can compare the effects of market volatilities on Shanghai Electric and Chengdu Kanghua 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 Electric with a short position of Chengdu Kanghua. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shanghai Electric and Chengdu Kanghua.
Diversification Opportunities for Shanghai Electric and Chengdu Kanghua
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Shanghai and Chengdu is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Shanghai Electric Group and Chengdu Kanghua Biological in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chengdu Kanghua Biol and Shanghai Electric 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 Electric Group are associated (or correlated) with Chengdu Kanghua. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chengdu Kanghua Biol has no effect on the direction of Shanghai Electric i.e., Shanghai Electric and Chengdu Kanghua go up and down completely randomly.
Pair Corralation between Shanghai Electric and Chengdu Kanghua
Assuming the 90 days trading horizon Shanghai Electric Group is expected to generate 1.22 times more return on investment than Chengdu Kanghua. However, Shanghai Electric is 1.22 times more volatile than Chengdu Kanghua Biological. It trades about 0.29 of its potential returns per unit of risk. Chengdu Kanghua Biological is currently generating about 0.1 per unit of risk. If you would invest 378.00 in Shanghai Electric Group on September 12, 2024 and sell it today you would earn a total of 533.00 from holding Shanghai Electric Group or generate 141.01% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Shanghai Electric Group vs. Chengdu Kanghua Biological
Performance |
| Timeline |
| Shanghai Electric |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Solid
| Chengdu Kanghua Biol |
Shanghai Electric and Chengdu Kanghua Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shanghai Electric and Chengdu Kanghua
The main advantage of trading using opposite Shanghai Electric and Chengdu Kanghua positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shanghai Electric position performs unexpectedly, Chengdu Kanghua 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 Chengdu Kanghua will offset losses from the drop in Chengdu Kanghua's long position.| Shanghai Electric vs. Guangzhou Jinyi Media | Shanghai Electric vs. ButOne Information Corp | Shanghai Electric vs. Dawning Information Industry | Shanghai Electric vs. Westone Information Industry |
| Chengdu Kanghua vs. Heilongjiang Publishing Media | Chengdu Kanghua vs. China Publishing Media | Chengdu Kanghua vs. Qtone Education Group | Chengdu Kanghua vs. XinJiang GuoTong Pipeline |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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