Correlation Between Southern PublishingMedia and Hengdian Entertainment
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By analyzing existing cross correlation between Southern PublishingMedia Co and Hengdian Entertainment Co, you can compare the effects of market volatilities on Southern PublishingMedia and Hengdian Entertainment 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 Southern PublishingMedia with a short position of Hengdian Entertainment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Southern PublishingMedia and Hengdian Entertainment.
Diversification Opportunities for Southern PublishingMedia and Hengdian Entertainment
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Southern and Hengdian is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Southern PublishingMedia Co and Hengdian Entertainment Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hengdian Entertainment and Southern PublishingMedia 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 Southern PublishingMedia Co are associated (or correlated) with Hengdian Entertainment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hengdian Entertainment has no effect on the direction of Southern PublishingMedia i.e., Southern PublishingMedia and Hengdian Entertainment go up and down completely randomly.
Pair Corralation between Southern PublishingMedia and Hengdian Entertainment
Assuming the 90 days trading horizon Southern PublishingMedia Co is expected to generate 0.46 times more return on investment than Hengdian Entertainment. However, Southern PublishingMedia Co is 2.19 times less risky than Hengdian Entertainment. It trades about 0.27 of its potential returns per unit of risk. Hengdian Entertainment Co is currently generating about 0.07 per unit of risk. If you would invest 1,500 in Southern PublishingMedia Co on November 3, 2024 and sell it today you would earn a total of 112.00 from holding Southern PublishingMedia Co or generate 7.47% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Southern PublishingMedia Co vs. Hengdian Entertainment Co
Performance |
| Timeline |
| Southern PublishingMedia |
| Hengdian Entertainment |
Southern PublishingMedia and Hengdian Entertainment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Southern PublishingMedia and Hengdian Entertainment
The main advantage of trading using opposite Southern PublishingMedia and Hengdian Entertainment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Southern PublishingMedia position performs unexpectedly, Hengdian Entertainment 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 Hengdian Entertainment will offset losses from the drop in Hengdian Entertainment's long position.The idea behind Southern PublishingMedia Co and Hengdian Entertainment Co 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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