Correlation Between Hefei Metalforming and Zhejiang Yayi
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By analyzing existing cross correlation between Hefei Metalforming Mach and Zhejiang Yayi Metal, you can compare the effects of market volatilities on Hefei Metalforming and Zhejiang Yayi 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 Zhejiang Yayi. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hefei Metalforming and Zhejiang Yayi.
Diversification Opportunities for Hefei Metalforming and Zhejiang Yayi
0.95 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Hefei and Zhejiang is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Hefei Metalforming Mach and Zhejiang Yayi Metal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zhejiang Yayi Metal 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 Zhejiang Yayi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zhejiang Yayi Metal has no effect on the direction of Hefei Metalforming i.e., Hefei Metalforming and Zhejiang Yayi go up and down completely randomly.
Pair Corralation between Hefei Metalforming and Zhejiang Yayi
Assuming the 90 days trading horizon Hefei Metalforming Mach is expected to generate 1.3 times more return on investment than Zhejiang Yayi. However, Hefei Metalforming is 1.3 times more volatile than Zhejiang Yayi Metal. It trades about 0.15 of its potential returns per unit of risk. Zhejiang Yayi Metal is currently generating about 0.03 per unit of risk. If you would invest 741.00 in Hefei Metalforming Mach on August 25, 2024 and sell it today you would earn a total of 79.00 from holding Hefei Metalforming Mach or generate 10.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hefei Metalforming Mach vs. Zhejiang Yayi Metal
Performance |
| Timeline |
| Hefei Metalforming Mach |
| Zhejiang Yayi Metal |
Hefei Metalforming and Zhejiang Yayi Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hefei Metalforming and Zhejiang Yayi
The main advantage of trading using opposite Hefei Metalforming and Zhejiang Yayi positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hefei Metalforming position performs unexpectedly, Zhejiang Yayi 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 Zhejiang Yayi will offset losses from the drop in Zhejiang Yayi's long position.The idea behind Hefei Metalforming Mach and Zhejiang Yayi Metal 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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