Correlation Between Hefei Metalforming and Strait Innovation
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By analyzing existing cross correlation between Hefei Metalforming Mach and Strait Innovation Internet, you can compare the effects of market volatilities on Hefei Metalforming and Strait Innovation 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 Hefei Metalforming with a short position of Strait Innovation. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hefei Metalforming and Strait Innovation.
Diversification Opportunities for Hefei Metalforming and Strait Innovation
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Hefei and Strait is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Hefei Metalforming Mach and Strait Innovation Internet in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Strait Innovation and Hefei Metalforming 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 Hefei Metalforming Mach are associated (or correlated) with Strait Innovation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Strait Innovation has no effect on the direction of Hefei Metalforming i.e., Hefei Metalforming and Strait Innovation go up and down completely randomly.
Pair Corralation between Hefei Metalforming and Strait Innovation
Assuming the 90 days trading horizon Hefei Metalforming is expected to generate 1.95 times less return on investment than Strait Innovation. In addition to that, Hefei Metalforming is 1.1 times more volatile than Strait Innovation Internet. It trades about 0.15 of its total potential returns per unit of risk. Strait Innovation Internet is currently generating about 0.31 per unit of volatility. If you would invest 245.00 in Strait Innovation Internet on November 7, 2024 and sell it today you would earn a total of 38.00 from holding Strait Innovation Internet or generate 15.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hefei Metalforming Mach vs. Strait Innovation Internet
Performance |
| Timeline |
| Hefei Metalforming Mach |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Strait Innovation |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Hefei Metalforming and Strait Innovation Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hefei Metalforming and Strait Innovation
The main advantage of trading using opposite Hefei Metalforming and Strait Innovation positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hefei Metalforming position performs unexpectedly, Strait Innovation 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 Strait Innovation will offset losses from the drop in Strait Innovation's long position.The idea behind Hefei Metalforming Mach and Strait Innovation Internet 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 Correlations module to find global opportunities by holding instruments from different markets.
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