Correlation Between China International and Shanghai Rendu
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By analyzing existing cross correlation between China International Capital and Shanghai Rendu Biotechnology, you can compare the effects of market volatilities on China International and Shanghai Rendu 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 International with a short position of Shanghai Rendu. Check out your portfolio center. Please also check ongoing floating volatility patterns of China International and Shanghai Rendu.
Diversification Opportunities for China International and Shanghai Rendu
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between China and Shanghai is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding China International Capital and Shanghai Rendu Biotechnology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shanghai Rendu Biote and China International 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 International Capital are associated (or correlated) with Shanghai Rendu. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shanghai Rendu Biote has no effect on the direction of China International i.e., China International and Shanghai Rendu go up and down completely randomly.
Pair Corralation between China International and Shanghai Rendu
Assuming the 90 days trading horizon China International Capital is expected to under-perform the Shanghai Rendu. But the stock apears to be less risky and, when comparing its historical volatility, China International Capital is 1.58 times less risky than Shanghai Rendu. The stock trades about -0.06 of its potential returns per unit of risk. The Shanghai Rendu Biotechnology is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 4,095 in Shanghai Rendu Biotechnology on September 12, 2024 and sell it today you would earn a total of 105.00 from holding Shanghai Rendu Biotechnology or generate 2.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
China International Capital vs. Shanghai Rendu Biotechnology
Performance |
| Timeline |
| China International |
| Shanghai Rendu Biote |
China International and Shanghai Rendu Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China International and Shanghai Rendu
The main advantage of trading using opposite China International and Shanghai Rendu positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China International position performs unexpectedly, Shanghai Rendu 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 Rendu will offset losses from the drop in Shanghai Rendu's long position.The idea behind China International Capital and Shanghai Rendu Biotechnology 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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