Correlation Between Hefei Metalforming and Pengxin International
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By analyzing existing cross correlation between Hefei Metalforming Mach and Pengxin International Mining, you can compare the effects of market volatilities on Hefei Metalforming and Pengxin International 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 Pengxin International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hefei Metalforming and Pengxin International.
Diversification Opportunities for Hefei Metalforming and Pengxin International
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Hefei and Pengxin is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Hefei Metalforming Mach and Pengxin International Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pengxin International 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 Pengxin International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pengxin International has no effect on the direction of Hefei Metalforming i.e., Hefei Metalforming and Pengxin International go up and down completely randomly.
Pair Corralation between Hefei Metalforming and Pengxin International
Assuming the 90 days trading horizon Hefei Metalforming Mach is expected to generate 1.1 times more return on investment than Pengxin International. However, Hefei Metalforming is 1.1 times more volatile than Pengxin International Mining. It trades about 0.24 of its potential returns per unit of risk. Pengxin International Mining is currently generating about 0.15 per unit of risk. If you would invest 576.00 in Hefei Metalforming Mach on August 25, 2024 and sell it today you would earn a total of 244.00 from holding Hefei Metalforming Mach or generate 42.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hefei Metalforming Mach vs. Pengxin International Mining
Performance |
| Timeline |
| Hefei Metalforming Mach |
| Pengxin International |
Hefei Metalforming and Pengxin International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hefei Metalforming and Pengxin International
The main advantage of trading using opposite Hefei Metalforming and Pengxin International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hefei Metalforming position performs unexpectedly, Pengxin International 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 Pengxin International will offset losses from the drop in Pengxin International's long position.The idea behind Hefei Metalforming Mach and Pengxin International Mining 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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