Correlation Between Hainan Mining and Shandong Longquan
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By analyzing existing cross correlation between Hainan Mining Co and Shandong Longquan Pipeline, you can compare the effects of market volatilities on Hainan Mining and Shandong Longquan 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 Hainan Mining with a short position of Shandong Longquan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hainan Mining and Shandong Longquan.
Diversification Opportunities for Hainan Mining and Shandong Longquan
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Hainan and Shandong is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Hainan Mining Co and Shandong Longquan Pipeline in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shandong Longquan and Hainan Mining 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 Hainan Mining Co are associated (or correlated) with Shandong Longquan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shandong Longquan has no effect on the direction of Hainan Mining i.e., Hainan Mining and Shandong Longquan go up and down completely randomly.
Pair Corralation between Hainan Mining and Shandong Longquan
Assuming the 90 days trading horizon Hainan Mining Co is expected to under-perform the Shandong Longquan. In addition to that, Hainan Mining is 1.14 times more volatile than Shandong Longquan Pipeline. It trades about -0.07 of its total potential returns per unit of risk. Shandong Longquan Pipeline is currently generating about -0.02 per unit of volatility. If you would invest 493.00 in Shandong Longquan Pipeline on November 7, 2024 and sell it today you would lose (19.00) from holding Shandong Longquan Pipeline or give up 3.85% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hainan Mining Co vs. Shandong Longquan Pipeline
Performance |
| Timeline |
| Hainan Mining |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Shandong Longquan |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Hainan Mining and Shandong Longquan Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hainan Mining and Shandong Longquan
The main advantage of trading using opposite Hainan Mining and Shandong Longquan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hainan Mining position performs unexpectedly, Shandong Longquan 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 Shandong Longquan will offset losses from the drop in Shandong Longquan's long position.The idea behind Hainan Mining Co and Shandong Longquan Pipeline 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.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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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