Correlation Between Shanghai Rural and Lianhe Chemical
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By analyzing existing cross correlation between Shanghai Rural Commercial and Lianhe Chemical Technology, you can compare the effects of market volatilities on Shanghai Rural and Lianhe Chemical 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 Rural with a short position of Lianhe Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shanghai Rural and Lianhe Chemical.
Diversification Opportunities for Shanghai Rural and Lianhe Chemical
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Shanghai and Lianhe is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Shanghai Rural Commercial and Lianhe Chemical Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lianhe Chemical Tech and Shanghai Rural 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 Rural Commercial are associated (or correlated) with Lianhe Chemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lianhe Chemical Tech has no effect on the direction of Shanghai Rural i.e., Shanghai Rural and Lianhe Chemical go up and down completely randomly.
Pair Corralation between Shanghai Rural and Lianhe Chemical
Assuming the 90 days trading horizon Shanghai Rural Commercial is expected to generate 0.71 times more return on investment than Lianhe Chemical. However, Shanghai Rural Commercial is 1.41 times less risky than Lianhe Chemical. It trades about 0.11 of its potential returns per unit of risk. Lianhe Chemical Technology is currently generating about 0.04 per unit of risk. If you would invest 668.00 in Shanghai Rural Commercial on September 1, 2024 and sell it today you would earn a total of 164.00 from holding Shanghai Rural Commercial or generate 24.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 99.19% |
| Values | Daily Returns |
Shanghai Rural Commercial vs. Lianhe Chemical Technology
Performance |
| Timeline |
| Shanghai Rural Commercial |
| Lianhe Chemical Tech |
Shanghai Rural and Lianhe Chemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shanghai Rural and Lianhe Chemical
The main advantage of trading using opposite Shanghai Rural and Lianhe Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shanghai Rural position performs unexpectedly, Lianhe Chemical 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 Lianhe Chemical will offset losses from the drop in Lianhe Chemical's long position.| Shanghai Rural vs. Fuzhou Rockchip Electronics | Shanghai Rural vs. Shanghai Broadband Technology | Shanghai Rural vs. Shandong Hi Speed RoadBridge | Shanghai Rural vs. Longjian Road Bridge |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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